YouTube has a new plan for the music industry: let's make up and make it rain instead of fighting (GOOG, GOOGL, LYV)
- YouTube struck a deal on Thursday with Eventbrite, the event and ticketing service.
- This comes nearly a year after YouTube signed a similar deal with Ticketmaster and after the European Union made serious changes that could greatly affect YouTube's copyright protections there.
- The deal also helps YouTube stay abreast with Spotify and Facebook who also provide users the ability to connect to ticketing services.
YouTube is flexing its muscle in the music business, but it's learning how to use its power as an enticement — and not a threat — to the artists and labels in the industry.
The video site's new partnership with Eventbrite, the event and ticketing service, is a good example of this new strategy.
The partnership, announced on Thursday, will let YouTube users rocking out to their favorite music click straight from the video clip to Eventbrite's site, and buy tickets to hear the artist live. YouTube signed a similar deal with Ticketmaster nearly a year ago.
Financial terms of the Eventbrite deal were not released, so we have no idea whether the partnership is directly contributing to YouTube's top line. Nonetheless, we can conclude that if YouTube assists in prompting some of its nearly 2 billion monthly logged-in users to buy concert tickets, that's likely to make music artists happy.
YouTube, which is owned by Google, generates billions of dollars in ad revenue every year, analysts estimate. A big chunk of YouTube's success is due to the music users listen to on the site. Though the music industry has long seen YouTube as a frenemy, it's clear YouTube wants to improve the relationship.
Record labels don't see a cent from live performances. But by steering its users to live concerts, YouTube could give a nice shot in the arm to artists, who have emerged as an important constituency YouTube needs to court.
A peace mission that could pay dividends
In years past, artists were reluctant to speak out on copyright issues for fear of alienating fans, many of whom were snatching pirated copies of songs from file-sharing services. They're not afraid anymore.
In 2016, a legion of them, including Lady Gaga, Ed Sheeran, Garth Brooks and Katy Perry, publicly lashed at Google and YouTube in a letter to European regulators. They claimed that the companies weren't paying enough for the right to host their songs.
This year, in a stunning defeat for YouTube, the European Union reformed copyright rules in an attempt to force YouTube and similar sites to share more of the revenue generated from songs, books, and movies with creators. This only affects copyright law within EU countries, but YouTube probably isn't very keen to find out if similar changes could happen in the US.
Thus, YouTube has embarked on a peace mission with the music industry.
The company has enlisted Lyor Cohen,a former top record-label executive, to serve as YouTube's global music chief and to lead the charm offensive.
The big record labels are in love with streaming services that charge monthly subscription fees, a la Spotify and Apple Music — so YouTube launched its own for-pay music streaming service. One record label executive recently raved to Business Insider about how pleased he has been to see YouTube Music ads "everywhere" he goes in New York City.
The labels don't like seeing links to pirate sites or to services that rip copies of songs from YouTube videos, so YouTube is cracking down (although still not to the full extent the labels want).
And with the live concert tie-ins, YouTube is making sure that the artists appreciate its ability to make it rain.
Sure, YouTube needs to offer concert ticket tie-ins to match the competition, since rivals like Facebook and Spotify also have features that let users find live performances. And YouTube Music's subscription streaming service is still struggling to get the kind of traction that Apple and Spotify have.
But after years of conflict with the music industry, YouTube now wants to play a new tune.
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