Study: YouTube Exposure For Top Artists Costs Labels $40 Million In Lost Sales

youtube-logo-200Is availability on YouTube a plus or a minus for entertainment content? Google has consistently argued that YouTube introduces new audiences to content that otherwise wouldn’t see/hear it and amplifies its visibility virally.

There’s anecdotal and empirical evidence for that assertion — at least in a video or TV context. However, a new academic paper (via TorrentFreak and embedded below) argues that the availability of music on YouTube can dampen or depress music sales by as much as 10,000 units per week among the most popular releases.

The researchers, from the University of Colorado Boulder and Fairfield University, explored the relationship between Warner Music Group’s YouTube “blackout” (based on a breakdown in licensing negotiations with Google), between January 2009 and October 2009, and its impact on search query volumes and related Warner music sales.

They looked at weekly sales figures for Billboard’s top 200 albums (via Nielsen SoundScan) and “constructed a globally consistent index of artist keyword search using Google Trends.” After controlling for a range of variables the study concluded that among the top 50 albums there was a causal, positive impact on sales but no negative impact on search query volumes.

In other words, the Warner blackout didn’t hurt interest and awareness as measured by search queries. It also resulted in more music sales for the top 200 artists on the Billboard chart:

[U]sing a six-month window before and after the blackout, the removal of content from YouTube is causally associated with an increase of 7375 units per week per album using the top 200 sample, 3155 units dropping top 10 albums, 1968 units dropping top 25 albums, and 555 units dropping top 50 albums. However, we caution that the lack of promotional effect in our sample need not necessarily generalize to those outside of the top 200.

The researchers go on to say that the “removal of content from YouTube had a causal [positive] impact on album sales by upwards of on average 10,000 units per week for top albums.” They calculated that the total lost sales to music labels, from availability of top artists and songs on YouTube, is potentially $40 million annually.

The implication is that YouTube is only a positive for labels if they’re getting more than that from Google in licensing fees.

The researchers said that this negative-sales effect was not observed below the top-selling albums. So where less well-known artists are concerned there may be a net positive effect from YouTube exposure, however that wasn’t studied.

These findings are pretty damning and I would expect Google to try and combat or refute them with its own research.

Related Topics: Channel: Video | Google: YouTube | Top News

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



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