YouTube’s Director of Artist Relations Vivian Lewit appeared on a SXSW panel this year moderated by Tom Silverman. I asked the panel a simple question from the audience as did a couple other audience members. My question was how much per stream does your service pay to artists? YouTube’s Ms. Lewit was the only one who dodged the question, but after a couple follow ups she confirmed it was less than a penny. Given the NDA culture surrounding Google, I was amazed to get that much out of her in a public forum.
Now I understand why.
In case you were wondering why IMPALA filed a complaint with the European Commission on Google’s monopolist tactics in licensing the new YouTube service, the Google Play messaging says it all. It’s a horrible deal for everyone except Google, just like YouTube. But the real reason its not a bad deal for Google has more to do with the non display uses of the music that these artists are helping to promote–very likely without their knowledge.
Non-display uses are the ways that Google profits from services that you don’t see–data mining is the biggest example of that. Just like Gmail allows Google to mine data from the contents of email, file attachments to the email and files stored in the same folder as the files that are attached to the message being scanned, Google Play will use music as a honey pot to draw users to the data mining machines.
And what is really insidious about the way Google uses music for data mining is that it attracts kids. As Money recently reported:
Google is working on versions of its services, such as YouTube and Gmail, that are specifically outfitted for children….Some privacy advocates are not particularly thrilled by the prospect of more children making Google accounts. Jeff Chester, executive director for the Center for Digital Democracy, told theJournal the new services could threaten the privacy of millions of children, and that his organization had already shared its concerns with the Federal Trade Commission.
Google Play (which is a rather whimsical brand to begin with) extends Google’s kid-targeted enterprise to hook them young on Google products–another reason to make it cheap for parents.
Of course, as we’ve shown previously, the “safety mode” on YouTube doesn’t keep out informercials for products like SeekingArrangement.com, the sugar baby/sugar daddy site implicated in the murder of a Google executive.
How much does Google Play’s slogan mean for artists? If you assume a digital album has a $5.00 wholesale price or thereabouts, that’s $0.0000002 per track as a royalty base price (before you apply the artist’s royalty rate). As Ms. Lewit said, that’s less than a penny. And since most royalty systems were not built to deal with $2E-7 as an monetary input, the system will probably round up to zero.
Now do you understand the reasoning behind non recoupable payments?
Of course you have to look at Google on a systemwide basis to understand the point of this. Google makes far more money selling advertising on pirate sites than it ever will make from Google Play. It makes far more money from data mining that it uses on all of its advertising platforms than it ever will make from YouTube. So this leads you to ask why do they have YouTube and Google Play?
Why did Don Corleone have the Genco Pura Olive Oil Company?