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master the algorithm

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Hey! It was so, so great to see how many of you have Trapital in your top 5 podcasts this year. Thanks for listening!

Today’s episode and memo are about YouTube and its role in music. We broke down how YouTube lowered the entry barriers to music, and provided a path for artists like Soulja Boy, Justin Bieber, Ariana Grande, and NBA YoungBoy to break through. And we also discussed YouTube’s storied relationship with the music industry since its launch. I was joined by a friend of the pod, Tati Cirisano from MIDiA Research.

You can listen to the episode here or read the highlights below.

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YouTube's eras in music

“I need to start focusing more on YouTube” is a phrase I still hear quite often. And that’s from artists, content creators, filmmakers, and more. It’s rare to find a social platform that’s almost 20 years old that people actively want to do more on.

But YouTube’s longevity has several distinct phases. Each phase can be marked by a signature artist and vibe.

The “crank dat” era

Soulja Boy broke through YouTube but he wasn’t an overnight success.

“Crank Dat” was the result of a year and a half of experimentation, focus, and user feedback. In early 2006, he was a 15-year-old teen from Mississippi who had the mid-2000s indie artist tech stack with YouTube, Fruity Loops, SongClick, and MySpace Music. He was early on the platform and benefited from the opportunity to gain mainstream traction before it got too crowded. It was a modern version of Bill Gates having early access to a computer during his younger years. It was an early version of Lil Nas X being early on TikTok.

Soulja Boy’s success was a turning point for do-it-yourself musicians and ability to break through without gatekeepers. His success inspired Lil’ B, Lil’ Yachty, Jay Rock, Drake (DRAAAKE?!?), and countless others.

Cover artists turned superstars

Justin Bieber’s 2007 YouTube covers of popular songs helped him get discovered by Scooter Braun, which led to his 2008 record label deal. It sparked two things.

The first is the power of derivative music on YouTube. On most streaming services, the only song version that matters on streaming is the artist’s original recorded version (unless it’s “Taylor’s Version”). But on YouTube, there’s the original music video, the lyric video, the audio-only video with the album cover art, the cover versions by multiple other artists, the live shows, a capella version, instrumental only, and more.

Bieber’s covers thrived in the nascent era of YouTube where “you gotta see this video of this 12-year old boy singing Ne-Yo, he’s legit.” was a huge deal.

Artists like Ariana Grande also thrived in the same era. She made her own music videos to popular songs, released her demo, released covers, and more. Her debut album, Yours Truly, had vibes of “Doesn’t she sound just like Mariah Carey?” Which felt like a product of the YouTube cover version era.

Master the algorithm era

As social networks become mature, “blowing up” is less about reaching all the users on the platform and more about reaching your fans on the platform.

NBA YoungBoy has done this better than most. Here’s what I wrote about him in 2021:

NBA YoungBoy’s strength on YouTube is also fitting since he speaks to an audience that doesn’t watch The Breakfast Club or the late night “Jimmy” shows. His fans love him, regardless of his past transgressions. YouTube is often a home for those who are dismissed by more mainstream outlets.

YouTube’s relationship with the music industry

YouTube’s global head of music Lyor Cohen has stated the platform’s goal to become the number #1 contributor of revenue to the music industry. It paid $6 billion from July 2021 to June 2022, compared to the $7 billion that Spotify paid in 2021.

It’s inevitable that YouTube will surpass Spotify. The platform continues to grow its user base and is far from its saturation point. But it also highlights how far YouTube has come with its relationship with the music industry.

In YouTube’s first decade of existence, tensions with the music industry were high. In 2016, the industry made more from vinyl sales than YouTube. This was before vinyl became “cool,” and at a time when YouTube still accounted for around half of all music listening on streaming. The industry was tired of the platform’s reliance on the dated 1998 Digital Millennium Copyright Act (DMCA) that could never predicted what the internet would become nearly 20 years later.

YouTube has grown its subscription product to over 80 million paid users across YouTube Premium and Music. But for a product with well over 2 billion monthly active users, that means around 4% of its users pay for the ad-free experience. Meanwhile, Spotify’s Q3 2023 earnings show that around 40% of its audience is on the premium service.

The product offerings may be somewhat similar, but Spotify and YouTube are completely different businesses in how they monetize and which revenue stream they rely on the most.

These are just a few highlights. We also covered:

• Google’s paid music monetization efforts over the years
• YouTube’s initiatives in AI
• YouTube Shorts impact

Hope you enjoyed this memo. If so, please share. Forward this email to someone who should read it. Text it to a friend. Drop the link in the group chat.

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​https://trapital.co/2023/12/01/youtubes-impact-on-music/​

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