…there was lunch in the larger, first floor cafeteria where, in the corner, on a small stage there was a man, playing a guitar, who looked like an aging singer-songwriter Mae’s parents listened to.
“It is,” Annie said, not breaking her stride. “There’s someone every day. Musicians, comedians, writers….We book them a year ahead. We have to fight them off.”
The singer-songwriter was signing passionately…but the vast majority of the cafeteria was paying little to no attention.
“I can’t imagine the budget for that, ” Mae said.
“Oh god, we don’t pay them.”
The Circle, by Dave Eggers
Lyor Cohen is going to run YouTube Music. My prediction is that in a year, he will not have been able to accomplish much of anything. This is not because of Lyor who is one of the best we’ve had in the music business. It’s because of the way Google operates and who is really in control.
First, remember that YouTube has made a point of telling us how unimportant music is to their business. I’m so sure that was part of their pitch to Lyor–you’re not going to be doing anything that’s very important to us or contributes much to our bottom line. So forget that fifth assistant and any revenue based bonus. Because, you know…you’re just not that big a deal to us.
Oh, to have been a fly on the wall…
But seriously, like any large organization, Google has competing bureaucracies and therefore its wholly-owned subsidiary YouTube does as well. (Google is now the largest media company in the world.) YouTube’s organizational independence is additionally blurred because it is the #2 producer of revenue inside Google relative to search and advertising sales. But not the music part, let’s get that straight now.
There seems to be a three-legged stool of competing interests in dealing with YouTube which we can describe with generalized labels–the “engineers”, the “policy people” (essentially Fred Von Lohmann) who are mostly lobbyists and lawyers, and the “business people” starting with Robert Kyncl and now with Lyor. It’s unclear who has the upper hand in this triumvirate, but it’s pretty clear that the business people do not control their destiny.
That leaves jump ball for control of YouTube’s deals between the engineers and the policy people who seem to compete with coming up with the solution that is the worst for anyone with a passing acquaintance with private property rights in general, and artist rights in particular. My hunch is that this will drive Lyor nuts in short order.
YouTube’s ineffective negotiating power with Big Google is particularly confusing because YouTube is both a search engine and an advertising publisher. (Let’s call the larger Google “Big Google”.)
We sometimes forget that YouTube is the largest video search engine in the world–but don’t let that go to your head because we all know how unimportant music is to YouTube.
What’s obvious is that the engineers and policy people do not understand a fundamental point about dealing with the creative community. They are every bit as much of ambassadors to the creative community–the entire creative community, not just the YouTubers who essentially are entirely dependent on YouTube for their success.
Why it is that YouTube has such little clout internally is anyone’s guess. My bet is that if YouTube didn’t have to check with a host of bureaucrats at Big Google, it would be much, much easier to do business with YouTube. However, if past is prologue, I seriously doubt that Fred Von Lohmann is going to take any guff from Lyor. Although I would buy tickets to watch.
To state the obvious, unlike the YouTube lottery winners, professional artists who are not dependent on YouTube are not dependent on YouTube. If pushed, there very well may come a day that they move on. En masse. Given YouTube’s recent change in monetizing only “advertising friendly” content and asking for a cut of brand integrations–Google’s version of 360 deals–even the “YouTube stars” may also move on–and how Lyor will relate to these folks is anyone’s guess. I think he could do pretty well with managing that artist relations problem, if the YT Stars will let him. Whether that happens remains to be seen.
But the mass artist exit may happen sooner than you might think, despite YouTube’s monopoly on video search. YouTube is currently taking a beating from artists and songwriters. Note that the beating is administered to YouTube–not to the engineers and the policy people at Big Google. Or not yet, anyway. Most professional creators don’t know these bureaucrats exist. Those bureaucrats at Big Google are largely faceless (with the exception of Fred Von Lohmann) and take no heat when YouTube gets roasted alive by key opinion makers in the music business (such as Irving Azoff). Lyor will have something of a honeymoon period, but regardless he can’t make the “value gap” disappear.
So how could Lyor repair the problems with YouTube? I think that it’s going to be a heavy lift, but it would start with Big Google telling their engineers and policy types to back off. Then we’d at least have an idea of whether YouTube can ever be a good partner. I suspect we could have at least much better relations with an independent YouTube. Whether Lyor agrees with that or could make it happen if he does remains to be seen.
Google hasn’t experienced an angry artist taking a baseball bat to their royalty department yet despite the $0.49 royalty checks. Someone with Lyor’s experience could definitely help out with that if it ever happens.
YouTube should try to shake off the control of their internal masters at Google. Then at least we’d know who we are dealing with. Right now it looks like Lyor is going to get a lot of blame simply because he has the name ID.