Research Shows That YouTube Hurts Music Sales (Um, Duh?)

April 10, 2014 Alan Cross 0 Comments

Who would have guessed that a free and legal on-demand music service would deter people from buying music? I know, I know, it’s hard to believe.

But wait! We have solid empirical evidence! According a new study, Warner Music found that they were losing $40 million in album sales per year by allowing their product to be streamed via YouTube. From TorrentFreak:

Researchers from Fairfield University and the University of Colorado have started to fill this gap with a new study. In their working paper the researchers examine the effect of Warner Music’s 2009 YouTube blackout on the record label’s album sales.At the time, Warner pulled all their music from the video hosting service due to a licensing dispute. The researchers use this event to compare the sales of Warner’s artists listed in the Billboard Album 200, to those from labels that still had their videos on YouTube.

The results are intriguing, to say the least. After controlling for several variables, such as music genre and album specific characteristics, they found that Warner’s top artists sold many more albums during the blackout.

“We showed that the removal of content from YouTube had a causal impact on album sales by upwards of on average 10,000 units per week for top albums,” the paper reads.

According to the researchers, these results indicate that YouTube doesn’t always serve as a promotional tool as many claim, certainly not for the top artists.

Like, duh, right?

HOWEVER, this study does not prove that having product on YouTube costs more than the benefits that come back. Sure people may buy fewer albums when they can see/hear the music on YouTube for free–but let’s not forget that YouTube has a pretty solid licensing model in place. Every time we watch a music video, we’re subjected to advertising. The labels get a hunk of that with every single view. It’s possible that their share of the ad review far exceeds $40 million. I’ll bet it does, too.

And as TorrentFreak points out, it’s not just piracy that’s hurting sales of physical product. And let’s not even get start on the accelerating role music streaming services are having on music sales.