How the music industry has changed | YouTube Advertising | Video Production

Will Someone Please Pay Psy

Yesterday (13th June 2013) Scott Mills on Radio 1 revealed that Psy had not received royalties for any of his current hits. Love him or hate him (the office is divided), Psy is not only a perfect example of a YouTube success story, but shows just how much the music industry has changed.

Psy

Psy Courtesy of Korea.net

How much is Psy due in Royalties ? Let’s speculate…

Psy’s YouTube channel (at the point of writing this blog) has 2,862,604,252 views.

‘Gangnam Style’ has 1,651,127,341 views

So how much is a view actually worth?

A number of our clients channels that we oversee benefit from YouTube advertising, so using one of those as an example we can estimate how much a view (with advertising enabled) is worth on average.

After crunching the numbers and some swearing at the calculator, the average worked out at £1.50 per 1,000 views in ad revenue.

 

We estimate that Psy’s YouTube channel could potentially be worth an incredible £4,293,906.38 from running adverts on his channel, with £2,476,691.01 being earned from for Gangnam Style alone.

A shift in behaviour

In the olden days when TV’s were fatter and mobile phones had rubber buttons, everything came down to record sales. Gangnam Style by the end of 2012 had been sold 3.59 million times in the US (and Canada).

According to ‘standard American Royalties’ at 9 cents (approx 5.8pence) per physical copy and download, this means that Psy could of have made £208,220 from those sales.

On iTunes, Gangnam Style has had an estimated 3 million downloads. According to TuneCore, only 1% (based on a $0.99 single) of the royalties goes to the artist/publisher.

 

Or according to some websites, such as Celebrity Networth, Psy is taking the full 70% (after iTunes etc take their cut), so has netted over £2.6 million.

To illustrate how things have changed, by the end of November 2012, Psy had only sold around 100,000 physical CDs (Celebrity Networth).

 

Video views vs record sales?

It’s not rocket science. The Gangham Style YouTube video has created an incredible profit in comparisson to traditional ‘record sales’.

Admittedly, it’s not record sales or video views that now generate Psy’s billions. There’s a lot of speculation flying around about where Psy’s pay packet might come from.

 

According to MWave, he’s now worth an estimated 10 billion (although the currency isn’t stated)!

 

This takes into account concerts, advertising deals, merchandise, royalties from other artists (even YouTube used the track in their new year video). Some 33,000 videos on Youtube have been recognised as using the song and he will get royalties from this too.

How has Psy done out of this?

Yes, the machine behind Psy will be taking their cut from all of this, but the beauty of Gangnam style for Psy is that he self wrote and composed the song, so the royalties and related revenues go back to him.

So why has he not been paid?

Psy says:

 

“Collecting money from more than 100 countries with i-Tunes and publishing and everything else takes a long time. I’m still waiting right now. Universal! Universal! I’m still waiting!”

 

YouTube success

To add to this thought, the CEO of Mahalo, Jason Calacanis, suggests that YouTube earns about $1.60 per one thousand views.

This means that YouTube made about £1,690,754.40 from Psy’s Gangnam Style video alone (remember they’ll be making money too from the other YouTube films using Psy’s song)!

 

It’s not all profit for YouTube though! In October 2012, Forbes speculated that the cost to YouTube for running the servers for Gangnam Style was already nearly £190,000. Feel free to do the maths on this one – it blew our minds! How Much Did IT Cost YouTube To Stream Gangnam Style? It’s still not a bad profit though.

As a final note

Interestingly enough, on the 3rd of September of 2012, this video was released:

Psy has signed with Scooter Braun, the manager of another YouTube success story – Justin Bieber. Even more interestingly, Scooter Braun’s record label, Schoolboy Records has signed a label and distribution deal with…Universal Music Group.

Hopefully Psy will get paid soon!

Featured image and image of Psy in concert courtesy of Korea.net

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