In search of some real online revenues

2 08 2008

Terry McBride, artist manager extraordinaire (Avril Lavigne, Sarah McLachlan, Dido, Barenaked Ladies), made some noteworthy comments recently at a MusicTank event in the UK about revenues in the new world of online digital media.

McBride reportedly said that plays of Youtube videos containing Avril’s music have collectively generated $2 million in royalties. (“There’s about a $2 million cheque waiting for her for all her YouTube plays.”) Terry has since clarified the remarks a bit on his blog, saying,

To date Avril’s songs have been used over 200 million times on Youtube with a good percentage being fan generated. Youtube has deals in place with the stakeholders of the IP (Publishers, Labels, Songwriting societies) that sees a share on a pro-rata basis in the advertising income created from these social activities. In time this will generate a few million dollars in income for all collectively involved. Thus my suggestions that Artist’s engage their fans creatively.

Terry is a true digital media luminary and I agree with his message that artists should be looking to creatively embrace rather than fear new online technologies and platforms. Unfortunately, it just seems though that real revenues still aren’t there for artists. Rather than portend a viable new revenue source for artists, Avril’s Youtube experience seems to be the exception that proves the rule that most artists can’t make money online. Revenues of $2 million on 200 million plays means a penny per play, and few if any other artists are going to be able to achieve the number of plays Avril has. Avril is among the last of a breed of 20th century pop artists built on big marketing budgets and radio play when people were still listening. Her popularity as an online phenomenon is largely a product of years of traditional media exposure. But for a new internet artist, 5 million Youtube plays would be considered a runaway hit, and would apparently net him/her all of 50 thousand bucks. Not bad for some Youtube revenues, perhaps, but no one’s going to be quitting their day job on that kind of income. If Youtube is the new source of royalties online, they’ll need to do better for artists than that.

I suspect Terry would respond that the point is really not how much you can make through online sources like Youtube; they are the promotional vehicle and you use them to leverage revenues from other verticals. And certainly that’s how things stand right now. But how much is really available in other verticals for the non-Avrils? And do they really have to settle? Youtube is a multi-billion dollar company and the biggest purveyor of online video by far. It’s still very early in the game, but if the royalties flowing from that golden urn are merely a trickle, there is reason to be worried about the future of ad-fueled online royalties in general.

I definitely agree with McBride that we’d see a huge uptick in retail music downloads if labels and retailers would drop the price. AllofMP3.com showed us that lots more people (in the West, anyway) are willing to pay for easy, convenient high-quality downloads if the price is right. Terry suggests a price of 20-25 cents per song. I personally think the sweet spot may even be slightly lower than that, but in any case by failing to embrace a low price point for downloads the recording industry has very possibly left a lot of money on the table.

Interestingly, Terry is also reportedly planning to make “a shitload of money” for Avril in China by setting up a Mandarin fan site. No doubt Avril is as big a Western star as you’ll find in China, but I’d love to know what Terry has up his sleeve; I hope it’s more than just selling online ads because that’s still a tough row to hoe in China. Video and music websites that get as many as 20 million or more hits per day often barely earn enough ad revenue to break even. I wouldn’t bet against Terry McBride, and there are ways to make money online in China–especially with a big-name artist like Avril–but it will definitely be some time before they’ll make a shitload.

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3 responses to “In search of some real online revenues”

12 08 2008
Maths (08:20:51) :

It was a little disingenuous for Terry to state that there is a “$2million cheque waiting”, when it is a known fact the 200 million mark was obtained by gaming the system.
Likewise, the “shitloads of money in China” claim is a similar “cheque is in the mail” throwaway comment – the proof is in the pudding.

But it is rich irony that a content owner turned the tables and seized the opportunity for a money grab attempt off a content aggregator site when the modus operandi has been the latter gaming other people’s content for riches of their own.

9 09 2008
Hugo Santos (09:23:42) :

2 million dollars? that is an impressive mark. But these royalties are only good to big players like avril, shakira, and so on. Less known performers won’t reach that count, and even if they reach a considerable one, they will never see that cheque…

25 09 2008
Bali Holidays (10:19:11) :

2 million dollars just from youtube? Wow, that’s a lot of money. But agree with hugo, I think that only applicable to big players in the industry.