There has been no other website that has revolutionized the Internet like YouTube. Since its launch in 2005, it quickly became the most talked about and frequented websites in existence. YouTube’s ability to quickly share videos, embed them on other sites and do all its functions at no cost to the consumer have made the company extremely popular. But it became apparent early on that monetizing this success would be a challenge: although YouTube’s first year was very successful in establishing a strong brand, 100 million hits per day yielded profits of only $15 million.
The key, therefore, was to find a way to monetize the service without sacrificing the business’s vision of easy and free access and diffusion. YouTube made its profits from advertisements played on the site and videos. When the company first started, it was difficult to anticipate which videos would go viral and which members would have a following of their own. This made it hard for advertisers. While YouTube’s embedding functions helped launch its popularity, the sheer variety of its video postings were all over the place. In time, the videos became easier to classify and marketing became more focused.
YouTube and Music
Music videos, especially, would make YouTube more desirable for advertisers. For a while, music videos made up over half of its content. If an artist had a strong fan base and fared well on the charts, it was very likely that audiences would follow. Advertisers took notice, and You Tube at last became a top-grossing website.
Yet major record labels became threatened by the easy accessibility of music videos. Because no proper compensation was paid, they proceeded to use the courts to remove videos where copyright infringement was noted. Warner, in particular, did not take kindly to YouTube’s earnings and made a point to shutter all unauthorized content. At the time, YouTube had no way of preventing copyrighted materials from being uploaded and, as a result, could not track infringing material. Warner has since made amends with YouTube and now allows content that is not completely in violation of copyright. Instead, Sony, EMI and Universal have chose to share their music videos with Vevo—a service that only displays professional high-quality product.
YouTube has also created an environment in which anyone can be creative and be acknowledged for their talents. This environment that nurtures development and provides an equal opportunity for success has been coined “The YouTube Phenomenon.” Artists have been discovered and their careers have flourished due to exposure in YouTube. This has led many groups out of obscurity. Pomplamoose, the indie duo from California, gained popularity on YouTube by uploading videos of unique, stylized covers of pop and top 40 songs. Their reputation on YouTube earned them features in advertisements from major companies like Toyota and Hyundai. The group used a popular way of displaying music on YouTube that has been called “video songs.” Jack Conte, one of the members of Pomplamoose, said that its videos are well liked because “what you see is what you hear.” They offer viewers a new conception of music that give them a completely new experience—for instance, a backstage pass allowing them to see all of the effort and execution that went into every track. Pomplamoose’s success did not go unnoticed by the majors and soon the band was faced with many offers. Pomplamoose refused all of the deals saying that their “goal is not to make hits…[but ] to make a self sustaining business.” In reality, the band had achieved that goal already by making low budget videos for YouTube that showcased their creative talents.
Many artists share Pomplamoose’s views. Besides, the music business seems to adapt now more to the DIY model, and YouTube gravitates in that direction. In March 2010, YouTube launched the Musicians Wanted program and made Pomplamoose its first partner. Independent artists can partner directly with YouTube and earn a share of the advertising revenue from their videos. This system provides an opportunity to make revenue without the constricting demands and needs of a record label. Ok Go, a band that got its start on YouTube from a music video choreographed on treadmills, dropped their major label, EMI, after the label refused to let fans embed music videos to share on other sites. Instead, they joined YouTube’s Musicians Wanted program. Since the release of the band’s video “Here it Goes Again,” they have received over 6 million views on YouTube and continue to gain followers, endorsements and success without any help from a major.
YouTube has revolutionized the Internet and completely changed the face of the music industry. It may be the Cinderella in the story, as it is often conveniently forgotten. But it has eliminated the barrier for musicians to reach greater audiences and now artists no longer need to rely on major labels to launch their success. Plus, YouTube has lit the way for many other websites to expand how fans consume and enjoy music. The music industry has started to evolve. Arguably, it now recognizes better the need to create a new business model that serves the creative process more compassionately while giving a better understanding of customer service and fan relationships. You Tube has been there all the way.
by Dean Miller