Nothing captures YouTube’s evolution as rights & advertising clearinghouse more than music’s love/hate relationship with pariah-turned-frenemy-turned belle of the media ball.

Music and gaming content have always been the biggest content categories on YouTube. It’s thus not surprising that both YouTube and the record labels are making the platform ground zero for their growth ambitions. YouTube is now officially a key engine of growth at Alphabet, with quarterly revenues growing rapidly, and labels, who have gone public like Warner Music Group, or planning to, like Vivendi’s Universal Music Group.

Innovator’s Dilemma, part 2: From Napster to YouTube

We have discussed some of the reasons that led to YouTube’s success:

YouTube’s success over the years was spearheaded by many genres and forms of content on the platform, namely:

The images above are taken from our video breakdown on Rise of YouTube – How YouTube Won AVOD Wars which I also expanded on in my keynote at Vidcon on the evolution of the streaming behemoth.

Record Labels: The Empire Strikes Back

From post-Napster to the pre-Spotify/YouTube era, the labels then cut a lot of costs… and then by the time streaming (Spotify, YouTube Music) came along, the revenue trickled down to the bottom line (what’s called Degrees of Operating Leverage).

WatchMojo’s editorial evolved over the years:

As a fan of music and a biographer, it wasn’t surprising that for a while, we set our sights on publishing record-smashing music editorial. We had nurtured our relationships with marketing execs at labels to move from interviews to biographies and profiles before nailing product/platform fit with top 10s commentary mashups featuring clips – what I call our Four big bets & key pillars. It was all legal, of course, but the labels’ saw in YouTube’s own insecurities and roots in piracy (all protected via the four safe harbors of the DMCA) an opening to force YouTube to tilt the playing ground in favor of rightsholders (if interested more in this, read Are Rightsholders unlawfully claiming $2 billion through ContentID?)

We fought back early on, and more or less prevailed, but over time, I moved on and we decided to tilt our editorial to what our fans really wanted more of – movies, TV shows, gaming – and left music editorial.

YouTube from pariah to belle of the ball

YouTube went on to recruit music industry veterans, which continued to endear it in the eyes of labels:

“Lyor Cohen, the head of YouTube Music and a legend in the music industry after stints at Def Jam and Warner Music Group, gets a lot of credit for changing that relationship. After Cohen showed up and a new payout deal was done, “they made it very clear that … they understood that they needed the perception of their platform to change from the industry perspective,” said Tarek Al-Hamdouni, the SVP of digital marketing at RCA Records. “They’ve done an excellent job of executing that.” Cohen was careful to say that the work’s not done, but he believes “we’re on the way to having a healthier relationship with the music industry.”

Back in 2006, I spotted an opportunity and vacuum in the marketplace but realized that over time, said pyramid would collapse as disruptive forces would force incumbents to embrace digital, especially as those digital pennies turned into real dollars. Which they have.

Today, the paradigm has changed to two spheres, those with audiences seeking content (in this case music rights) and those with IP seeking audiences (watch our breakdown here).

Warner Music Group has done many acquisitions to build a direct-to-consumer base. But those are all small steps compared to what YouTube presents labels:

“YouTube has entrenched, undeniable advantages, an audience larger than all its competitors combined and practically infinite resources. “It is arguably a better fit for Gen Z and younger millennials than Spotify is, as YouTube as a whole plays a much bigger part of their overall digital lives,” said industry analyst Mark Mulligan. For the last several years, YouTube has squandered all of that, with one bad or bailed-on idea after another. But now, YouTube has a plan for how to win the music wars.”


One easy knock on music-streaming services is that they’re all the same. Their libraries may differ slightly at the margins, but they all have about the same 60 million or so songs in their catalog. And Mariah Carey’s “All I Want for Christmas is You” sounds pretty much the same anywhere you play it.

Except on YouTube. There you can watch the original version, but also the Carpool Karaoke version, a duet Carey did with Justin Bieber, the scene from “Love Actually” that features the song, and countless live performances, covers and remixes. Want to learn a dance to the song in time for this year’s holidays? Want to learn to play the song on the guitar or piano? Want to hear a smash-cut version of President Trump singing the song? Want to know how that song got to be so irritatingly ubiquitous? That’s all on the first page of the YouTube search results. YouTube has a corpus of unique music content that none of its rivals can touch.”

It’s understandable for YouTube (as challenger to Spotify in music, and viewed as frenemy by labels) to be open and accommodating; there’s no real guarantee that users will care:

Using the same Mariah Carey example, I would also add (bias aside) that YouTube boasts through its creator community a kickass catalog of music biographies and profiles, top 10s, decade recaps and much more. For an analysis on how YouTube and the labels can further drive revenues, views and engagement by bringing together the many stakeholders, read this and subscribe to Context TV for more video analysis on the industry, or check out this website for articles and more.