Overall digital revenue to the recording industry in the US in the first half of this year -- from every source, including downloads, streaming, ring tones, you name it -- reached $2.66 billion, 77.5 percent of the industry's total half-year haul. Ad-supported dollars stateside accounted for $195.4 million of that total, up 23.6 percent year-over-year.
Universal Music Group, Warner Music Group, Sony Music and the American Association of Independent Music did not immediately respond to a request for comment on the company's news, but the International Federation of the Phonographic Industry released a statement saying that with "800 million music users worldwide, YouTube is generating revenues of just over US$1 per user for the entire year. This pales in comparison to the revenue generated by other services."
In a phone call shortly after the initial posting of this article, one recording industry executive told Billboard that they are "struggling to understand" how YouTube "came up with" the $1 billion figure, and referenced a perceived 'value gap' between "how much consumption is going on and how poorly" the company monetizes that consumption.)
YouTube also has the shadow of copyright and safe harbor reform -- at least in the European Union -- to worry about. Safe harbor provisions, both in Europe and the US, provide a legal shield for internet companies that host uploaded content and changes to it could fundamentally shift its business model.
YouTube is still looking to secure licensing deals with the three major labels (ahead of any long-term contracts the companies maintain provisional, stop-gap deals). Meanwhile, the company's only meaningful competition in the music video space, Vevo, said recently it hopes to stop "ceding the conversation" around those videos. (That it would unseat YouTube as a source of music listening is... unlikely.)
The revenues that YouTube returns to the recording industry is dependent on the health of the global digital advertising market, which has benefitted (slowly) from ad dollars trickling towards digital platforms. The global digital ad spend next year is expected to reach $69.2 billion, according to Zenith, with online video expected to draw $35.4 billion from advertisers by 2019. (Total global ad spend this year is expected to reach $524.5 billion.)
Facebook and Google, YouTube's parent company, together control over 54 percent of the digital advertising market, according to Magna.
Updated, 2:04 pm ET, Dec. 6: A statement from the International Federation of the Phonographic Industry was added to this report.