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YouTube's Acquisition Of BandPage: A Glimmer Of Hope And A Convergence In Entertainment Strategy

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This article is more than 8 years old.

What do all music streaming services have in common? They have colossal user bases, but no profit. Recent headlines paint a particularly dismal picture of the streaming market: two days ago, we learned not only that SoundCloud lost $70 million in revenue over the last two years, but also that Pandora , which reported a net loss of $19.4 million last quarter, is allegedly in talks about selling itself. Moreover, artists continue to receive paltry royalty checks from these streaming services, making the latter a constant scapegoat in the digital music industry's persistent financial instability.

YouTube, which is just barely breaking even, announced a new acquisition yesterday that could finally turn this streaming gloom around. For a sum of $8 million, the video-sharing website acquired BandPagean online centralized profile that hundreds of thousands of artists use to consolidate and distribute photos, tour info, merchandise and other products and information to their fans across multiple platforms.

BandPage makes marketing easier for artists by automatically updating their profiles across Spotify, SoundCloud, Facebook , Twitter and other key streaming and social media sites. Artists are also granted a substantial level of flexibility in terms of customizing their page and tailoring different experiences to different types of fans.

More importantly, BandPage has a proven track record of increasing fan engagement and revenue. In August 2015, the startup revealed optimistic numbers from its partnership with Rhapsody, which analyzed listener data to target artists’ “superfans” and deliver push notifications to those users' phones. BandPage’s push notifications not only generated 50% more overall fan engagement than other personalized messages sent through Rhapsody, but also drew clicks at "double the rate of Google Search ads, 10x the rate of Facebook ads, and at over 50x the rate of traditional web display advertising,” according to the BandPage website.

The acquisition will hopefully make YouTube a friendlier environment for artists, as the debate continues regarding the true value of YouTube for the music industry. According to data from Nielsen and the Recording Industry Association of America (RIAA), YouTube is responsible for 52% of all on-demand music consumption but only 13.5% of its revenues. Artists like Justin Bieber and Psy have been able to cultivate global careers in large part because of their YouTube popularity, and the site has paid out over $1 billion to music rights holders over the years, but research nonetheless shows that YouTube pays out as low as $.0003 per play to unsigned artists. Thus, while YouTube has become indispensable as a distribution platform for musicians, it also seems to play a key role in devaluing the music industry’s currency in the larger transition to streaming.

Perhaps in response to these critics, YouTube has rolled out its own tools and resources to help musicians increase both exposure and revenue, such as YouTube For Artists and YouTube Space. With the recent launch of its ad-free subscription service YouTube Red, the platform also seems to be experimenting with more business models, in an attempt to diversify and increase its own revenue streams. With BandPage on board, YouTube musicians will hopefully be able to monetize their works more effectively compared to what other platforms have provided to date. In particular, one of BandPage’s strengths from which YouTube could develop a significant competitive advantage is its ability to leverage and improve the direct artist-fan relationship online, which is relatively lacking on services like Spotify and Apple Music.

It is also important to note that BandPage is a platform tailored for music, whereas YouTube is not. Although the most-searched topic on YouTube was Music in 2014, there are also plenty of filmmakers, video gamers, beauty experts, choreographers, visual artists and other creators building their careers on the website. All of these creators could benefit from BandPage’s expertise, particularly with regards to niche marketing and customer segmentation, organic growth and identification of superfans, and flexibility and adaptability of business models.

In fact, YouTube's acquisition of BandPage could be a powerful cog in the wheel that is fostering dialogue between music and adjacent industries, as increasing digitization makes these industries less and less stable. For instance, the success of video gaming, especially through platforms like Steam and Twitch, has triggered conversations in the music industry about how to develop innovative marketing and business strategies for the new generation of content creators—gamers, musicians or otherwise. This conversation has also translated to collaboration, with the introduction of Twitch Music and the presence of musicians as prolific as deadmau5 on the live-streaming platform. YouTube does have its own live-streaming video game channel, YouTube Gaming, and BandPage could perhaps help these gamers monetize better on their following as well, even though the latter's experience is primarily rooted in music.

In its own announcement of the acquisition, BandPage asserted that "this is about our partnership with you, the musician," an important message that artists' well-being is a first priority for all parties involved. At its most fruitful, however, this acquisition would benefit all creators that converge on YouTube, and present a model for building financially stable and successful careers in any creative industry on the web.