It’s no secret that YouTube is now one of the primary engines that drives music discovery on the web. Last year, one survey even showed that two-thirds of teens 18 and under used the site to listen to music more often than any other format – CDs, downloads and audio-only streaming services included.
As more consumers come to rely on the video streaming site and grow accustomed to increasingly high production values, YouTube has finally begun to turn from the Wild West it once was, into a freshly-tamed frontier where creative professionals can actually begin to make a little bit of sustaining income for their efforts.
What led to this change was the success of YouTube’s Content ID system, which creates “digital fingerprints” of audio and video files in order to help flag unauthorized and exploitative uses of artists’ work.
Up until recently however, there’s been one big problem: Many independent and self-released artists have had trouble accessing the Content ID service at all, and those with access, have often had to give away a significant chunk of their revenues to intermediaries.
Thankfully, that too is beginning to change, largely due to new competition in the market.
Content ID, Then and Now
YouTube’s Content ID system was first developed in 2007 in response to a major lawsuit from Viacom. The charge? That the site had knowingly profited by distributing stolen work – a breach that would make them lose their protection under the “Safe Harbor” clause of the DMCA.
When Content ID first launched, YouTube offered it only to the large media players who had demanded its creation to begin with. Eventually, the service became available to significant independent labels and distributors, like The Orchard.
For some time, however, the smallest independents and self-released artists were largely left out. But that began to change last year, when CD Baby teamed up with Rumblefish in order to bring comprehensive YouTube rights management to its users.
This summer, things really began to heat up as the founders of the indie distributor Tunecore stepped into the game with a new startup called Audiam. At about the same time, ONErpm and AdRev debuted their own new services as well. These latest intermediaries promise to make Content ID available to more rights-holders than ever before – and pay out record percentages, too.
The Services Compared: CD Baby (Partnered with Rumblefish)
The one thing that CD Baby has going for it is convenience. If you already use the platform, you don’t have to do much to have them help you take control of your rights. Just check a box and you’re done. The drawbacks however, are twofold:
Number one is that CD Baby pays out a relatively low percentage of ad revenues when compared to the newer services on the market. In part, this is because with them, you’re essentially using two layers of intermediaries.
Although CD Baby itself only takes an easily justifiable 10% cut off the top, they turn around and hire Rumblefish to actually do the license management. And that company takes another 50% for themselves.
In the end, the artist is essentially left with 45% of revenues for herself (and that’s not even counting YouTube’s cut of ad revenue, which we’ll largely leave out of of this overview for the sake of a simple and even comparison.)*
Although 45% is far better than the 0% that YouTube thieves are willing to pay for licenses, it’s clear why so many new companies have seen a clear opportunity to step in and offer artists more.
The second problem with the CD Baby/Rumblefish combo is that it can make it more difficult for artists to sell their own ads on their own channels.
If you have your own YouTube channel (or if you’re a member of a “Multichannel Network” like Vevo and IndMusic) chances are that you’ll be able to negotiate a higher rate on advertising than you’d be able to get through Content ID claims. And of course on your own channel, you can keep 100% of these higher net revenues for yourself, no Content ID intermediary necessary.
Critics complain that by default, CD Baby and Rumblefish use Content ID to claim content on your own channel, subjecting you to a lower advertising rate, and a 55% cut off the top. You can opt out of this, but it appears that doing so currently requires an extra step later on. (CD Baby did not respond with comment.)*
*Correction – 9/13/13: CD Baby has followed up to say that they now pay out a total of 55% for Content ID claims on YouTube.
A representative for the company also adds that they can now create “album art videos” on behalf of their clients, which pay out a respectable 75% of revenues.
The CD Baby competitor with the most name-recognition among independent artists is probably Audiam, due to its principles’ former involvement with TuneCore. Co-founders Jeff Price and Peter Wells also co-founded TuneCore.
Audiam seems to have already learned a thing or two by watching where CD Baby has succeeded and stumbled. It replicates the convenience benefit of CD Baby while also managing to avoid their competition’s two biggest pitfalls:
First, they pay a far higher rate – 75% in total. (This is about 65% higher than what the CD Baby/Rumblefish combo offers.) Secondly, they make it easy to “whitelist” your own channel, giving you the option to easily sell your own ads at a higher rate.
Even if you already use CD Baby for digital distribution, this makes Audiam a pretty attractive option for YouTube sync licensing. Unless this new competition encourages CD Baby to step up its game. Which it will likely have to in the long run.**
** Correction 9/13/13 – This article originally implied that Audiam and its founders, Jeff Price and Peter Wells, are still associated with Tunecore. This is no longer the case. The two broke with company in 2012.
ContentID.com from AdRev
Another new service for independent artists is ContentID.com, developed by Ad Rev. Despite its lack of name recognition among indies, AdRev actually has more experience with YouTube licensing than any of its competitors in this field.
For the past few years, AdRev has negotiated deals and handled YouTube rights for a huge swath of major clients including Universal, Warner Chappell and Opus1, and currently has over 3 million rights under management.
Although the company doesn’t offer the all-in-one convenience of a conventional digital distributor, it has a real track record as a YouTube licensing specialist, handling infringement claims.
On top of this, it seems that AdRev’s ContentID.com service pays out the highest base rate of any of its competitors: 80%. They’re also officially certified by YouTube.
Like Audiam, AdRev makes it easy to whitelist your own channel so that you can sell ads on your own at a higher rate. But it also adds another layer of service:
The company even runs its own multi channel network, which means it can sell higher-grossing direct ads on behalf of its clients – instead of merely dredging up lower-paying “user generated content” claims. This is something that neither CD Baby nor Audiam offers at this time.
The last of the major competitors to enter this field is ONErpm.
ONErpm is a digital distributor which got its start by handling international licenses for its clients, and later developed a popular Facebook App that allowed artists to sell their recordings straight from their fan pages.
ONErpm offers most of the benefits of AdRev’s ContentID.com. They’ve got a a solid rate, the easy whitelisting, and their own Multi Channel Network, which means they too have the potential to sell ads for you at a higher rate than what you might get from Content ID claims on user generated content..
Although their percentage payout is lower than AdRev’s at just 70%, they do offer traditional digital distribution options, which bumps up the convenience factor a bit.
On the surface, their 70% payout on user-generated Content ID claims also seems lower than Audiam’s 75% rate. But there’s arguably the potential for actual payouts to be higher for artists who make a deal with ONErpm’s Multi Channel Network. OneRPM’s wager is that getting a 70% cut of both Content ID claims AND higher-grossing direct ads will be a sweeter deal for artists than getting 75% of lower-paying Content ID claims alone.
Teaming up with any of these new services is probably a better bet than using none at all. Not only can you earn a bit of extra revenue from YouTube streams, but you can control “if, when and how” others profit from your work.
If you already have a distribution deal through CD Baby, then using them for YouTube licensing might seem like a pretty attractive and easy option.
For my own work, I’d probably lean toward giving AdRev’s ContentID site a try. It offers the highest payout percentages, the potential for a multi-channel partnership, and a longer track record in the field than any of its competitors.
At this point, there is no doubt that on-demand streaming is changing the face of the music industry. Ultimately, I believe it will be for the better. The revenue may be a mere trickle now, but the industry as we know it now is a far cry from what existed years ago. Fast forward five or ten years from now and it will look very different once again.
Services like these are helping to drive that change. Although teaming up with a Content ID intermediary is unlikely to make anyone a living overnight, it is probably a step in the right direction. If services like these seem novel or superfluous today, rest assured they will become an indispensable part of digital distribution and rights management in the 21st century.