TuneCore Reports $42 Million Collected, Dramatic Jump in YouTube Revenue
As the global music industry edges closer and closer to a digital-dominated revenue reality, digital distributor Tunecore is growing right along with it. In the first quarter of 2016, TuneCore paid out $42 million to its artists, a 16 percent increase year-over-year from the first quarter of 2015 and higher than the 10.2 percent increase in digital revenue that the IFPI recorded in its annual Global Report this past April.
The breakdown of the numbers parallels the explosion in streaming and the potential of international markets that led to the global music industry's first year of revenue growth in over a decade. Accordingly, increases from streaming services like Spotify, Tidal, Deezer and Rhapsody (recently re-branded as Napster) were up across the board, as increased competition from the likes of Tidal and Apple Music increased the number of subscribers 66 percent in 2015. And while an increase in artists who signed up for the platform (up 44 percent year-over-year) and added streaming subscribers helps push revenue higher, TuneCore CEO Scott Ackerman also points to services' emphasis on playlists and curation as an opportunity for its indie and up-and-coming artists.
"Playlists and features are an important piece," he tells Billboard. "We try to identify it and work with the stores to [get our artists involved], but I think the stores are getting more aggressive and trying to do it themselves now, too. [It's] really a win-win, because an artist has both the store and Tunecore supporting them to get their music heard."
One of the most eye-opening statistics from TuneCore's report is a 126 percent growth in gross revenue from YouTube, which includes a 730 percent increase in revenue from YouTube's Art Tracks initiative, which creates a "YouTube version of a sound recording" that is sanctioned by the artist and label in lieu of a music video. The growth in revenue from YouTube comes at a contentious time for the video streaming service, which has been under fire from labels, artists and managers about its royalty rate and use of the DMCA's safe harbor provision that protects them from lawsuits over user-uploaded copyrighted content. Ackerman recently referred to revenue from YouTube as "found money."
"We call it found money because artists don't really know it's there," Ackerman says, referring to artists' ability to monetize those songs uploaded without permission, which TuneCore helps to accomplish. "This year we're going to almost triple the YouTube revenue in that product, because there's more and more people creating videos and using artists' music." But in terms of the larger DMCA complaint, Ackerman declines to jump into the debate.
"I think when you look at our artist base, they're not as concerned that somebody put a video up using their music, as long as they're being paid for it," he says. "If they're not being recognized for that music and getting monetized for it, that's wrong. But YouTube has a system where artists can go through TuneCore and we'll go out and search for them where their music is being heard and give them the money they deserve off the advertising piece... While some artists are claiming that they're not making money on YouTube, our artists are continuing to make more and more, and they're getting more exposure."
TuneCore's publishing administration division also saw a 36 percent boost, with a new emphasis on synchs driving 188 percent growth. And a renewed focus on international offices -- since September 2015, TuneCore has launched in the U.K., Australia and, this April, Germany, in addition to its Canada and Japan operations -- helped drive double-digit growth in Britain and Australia.
"When we survey our artists, the number one reason they come to TuneCore is for worldwide distribution," Ackerman says, noting that there are plans for further expansion later this year. "We put our artists' music up in Asia now, focusing on a lot of new stores in Africa. We're working hard to get our artists heard more and more globally so there are more opportunities to make more money."