Efficient monetization of an online platform "takes time," YouTube's music chief Lyor Cohen said earlier this week while defending the business model of the Google-owned streaming service. Cohen attended the New York City-based New Music Seminar this Wednesday and spoke with a number of senior executives from the music industry, many of whom have criticized YouTube, Spotify, and other ad-supported music streaming platforms in the past, stating that such solutions not only pay out weak royalties but also haven't fully addressed the problem of piracy. The former was one of the main subjects of the Wednesday debate, with music industry executives questioning the sustainability of YouTube's business model and noting how its ad revenue is growing at a relatively slow pace and is consequently affecting their royalties.
The 57-year-old argued that the industry as a whole is too impatient and needs to be willing to give YouTube and general ad-supported streaming platforms a better chance to prove their worth, noting how this business model still generated $469 million in revenue for record labels last year. While paid streaming services recorded $2.47 billion in revenue over the same period, ad-supported alternatives are showing positive growth indicators, Cohen said, comparing such services to the entire hip-hop genre in the '80s which took years before establishing itself among a mainstream audience. Given his experiences with Rush Productions and Def Jam Records, Cohen can be considered an authority on hip-hop and its history, though some currently active music industry executives remain skeptical about the notion of that genre being similar to free music streaming solutions in terms of obstacles they're facing.
Cohen also called for the music industry to be more supportive of streaming services and show some initiative and willingness to collaborate, pointing to the struggling SoundCloud as an example of a platform that could still be saved from financial collapse through key partnerships with music labels. The industry needs to do more than just sign a license agreement and let the tech sector come up with a solution for distributing and promoting it in an effective manner, Cohen implied, without clarifying on the matter. During the same panel talk, YouTube's senior executive revealed that YouTube Red and Google Play Music are set to merge in the near future, signaling major changes to Google's approach toward content streaming.