Conventional wisdom on YouTube: Eyeballs go in, but no money comes out. Google can’t figure out how to sell ads against the videos it shows, so the people who make YouTube’s videos aren’t getting any money out of it.
Not true, says Terry McBride, who runs both a music label and management business under the umbrella of Nettwerk Music Group: There’s plenty of cash. For instance, he told a London music conference this month, pop star Avril Lavigne, who Terry manages, is going to make a mint: “There’s about a $2 million cheque waiting for her for all her YouTube plays.”
How’s that going to work? We called Terry to ask. The answer: He’s not quite sure.
Here is Terry’s basic maths: By his count, Avril has already generated some 200 million streams on YouTube. He thinks, but doesn’t know, that YouTube is paying out between $0.005 and $0.008 in revenue share each time it streams an officially licensed video. If YouTube is paying out 0.8 cents per stream, it means it is already on the hook for $1.6 million. And Avril will certainly keep cranking out videos, and streams, for some time to come. So there’s definitely money there.
Video tracking service TubeMogul confirms Terry’s estimate of Avril’s YouTube popularity. In fact, it says, that 200 million number only accounts for officially licensed stuff — if you include grey area clips, like those of kids lipsyncing to her songs in their bedroom, the total is closer to 1 billion. And Terry’s 0.8 cents per stream estimate seems plausible: Guesstimates place YouTube’s CPM at $15, which means it is generating 1.5 cents for every stream it generates. It may well be giving up half of that to content creators/rights holders.
But even those rough estimates are full of uncertainty: In addition to not knowing YouTube’s aggregate revenue payout, Terry doesn’t know how that money will be split between various rights holders: Avril’s publisher, Avril’s record company (Sony BMG) and Avril herself. He’ll start to figure out some of that once he starts to see actual royalty statements. None of this going to happen anytime soon, Terry says: He figures Avril is another 2 to 3 years from seeing a significant payout.
So to sum up: Avril Lavigne’s manager thinks she will get some money, some time, from YouTube. That’s not as dramatic as the prospect of a $2 million check. But Terry says that no matter what the sum is, his larger argument is correct: Music acts should stop thinking of YouTube as little more than a promotional machine, and start thinking of it as a revenue stream.
In the meantime, we wanted to give you the opportunity to generate a few more fractions of a penny for Avril, et al by showing you her “Girlfriend” video here. But someone (presumably her record company) has turned off the embed feature on her YouTube channel. So here’s the same video, via something called “VideoCure”.
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