With Taylor Swift and Paul McCartney leading the charge, it’s easy to think the entire music industry is doing battle with YouTube. But with countless artists and enterprises using the site as a springboard to success, things aren’t so simple

As artists, record labels, music publishers and managers line up to lobby the US Congress and the European Union, it might seem as if YouTube is the worst thing to happen to the music business since Napster in 1999. The streaming service, the aggrieved parties claim, is causing a massive “value gap” that is unsustainable. In brief, millions of users watching billions of videos are contributing peanuts towards ad revenue. The video service is also, they feel, building a huge business around their copyrights by gaming the safe harbour exemptions in the law, which mean it is absolved of guilt if its users upload music without a licence and only has to comply if told to take it down.

According to those who oppose the service, YouTube is slowly killing the music industry, one tiny cut at a time. It is anti-artist and anti-copyright, they claim. Meanwhile, every major artist has a channel on YouTube and wouldn’t dream of releasing a new record without YouTube involved in its launch.

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Although many have a conflicted relationship with YouTube, there is a generational conflict dividing the field. Those in the “old” music industry want to keep things the way they always were, nailing down copyright in every way possible. Yet around them a “new” business is emerging – prescient and whip-smart artists, managers, labels and media organisations – who see YouTube as a facilitator of a creative renaissance rather than a death sentence.

Leeds-based singer-songwriter Hannah Trigwell describes discovering YouTube’s promotional potential as “like finding treasure”. Six years ago, she started uploading videos of her own songs, all without using her real name, to avoid her classmates finding out what she was doing. It was a stark contrast to the busking she had been doing.

“I didn’t have a fanbase at the time and it was difficult to get gigs with promoters because no one knew who I was,” she says. “It was obvious to me that unless I was very lucky with the right person coming along at the right time, I was going to have to forge my own journey.”

She praises the immediacy of the YouTube platform, whereby she can get instant feedback on songs or works in progress, as well as its global reach. A cover of Tracy Chapman’s Fast Car was a success on her channel and the data tools YouTube supplies to all users revealed an unexpected detail: her fastest growing audience was in south-east Asia.

Although Trigwell knows she cannot survive on YouTube income alone, she believes it provides opportunities for profit to be made. “YouTube is definitely my main focus, but it is primarily a promotional tool,” she says. “The things that come indirectly from YouTube – the touring and selling merchandise online – would be impossible without it.”

Having recently signed a partnership deal with Absolute Label Services – a music marketing and distribution company – she does not see YouTube as a fast track to a traditional record contract. “If the right one came along I would consider it, but I’m not desperate for a record deal as I am a full-time musician right now,” she says. “YouTube has made it possible to be like that.”

Amid the mounting assault, YouTube argues that it has introduced tools specifically for the music industry, notably “cards” that let owners annotate their videos and create links to ticketing sites, streaming sites and download stores – essentially turning YouTube feeds into sales channels.

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“The music industry were our very first partners on YouTube – the first ones to sign agreements,” says Candice Morrissey, head of YouTube music partnerships in Europe, the Middle East and Africa. “We have a revenue share arrangement with our content partners, so the more they succeed the more we succeed. The more revenues that are created, the better it is for everybody. We hear their complaints about the amount of consumption, but I feel they are maybe not looking at it in the right way or through the right lens. The advertising business model is based on consumption. We want these revenues to grow in the future and we are convinced the advertising model will work for everybody.”

Morrissey adds that while she wants the service to be as successful as possible, the industry should not be solely dependent on a single platform. “Even the biggest YouTube stars are developing businesses outside of YouTube – doing a book or making movies,” she says. “That makes a lot of sense. YouTube is the focus for them as that is where their engaged audience is.”

Facebook Twitter Pinterest Alan Walker agreed a deal with Sony Music Sweden after his song Faded drew nearly 500m views on YouTube. The site is ‘like a marketing channel and a way to distribute his music,’ says his manager. Photograph: Sony Music

Traditionally it has been the label that has sat between the artist and the audience, and their business model has revolved around the acquisition and exploitation of sound recording rights: insisting on being paid for every use and refusing to loosen their stranglehold on copyrights.

NoCopyrightSounds (the clue is in the name) was set up in 2011 by Billy Woodford to address a problem for his video games review channel on YouTube. He wanted to use music in those videos, but the only copyright-free music online – on sites such as Creative Commons was – to his taste, not very good. There was also a risk of having a copyright strike against his channel if he used music from a label without paying for it.

His idea was to scour SoundCloud for good copyright-free music and make it available to gamers, and others on YouTube, for free. All they had to do was list the name of the artist and song so any viewers, if they liked the music, could investigate further. “I was just promoting free music,” Woodford says of the early days of NCS. “I saw a pretty good business opportunity as no one else was doing it. Still to this day, record labels haven’t seen the potential in this.”

The business model behind NCS is to use YouTube and YouTubers to build interest in music and for that to be monetised elsewhere. It regards YouTube as the starting point to make money through other channels – primarily via links to Spotify and Apple Music. “The way I have always seen it is people using our music are showcasing it in their videos to potentially hundreds of thousands of people,” Woodford explains. “If you get 10% of those people who like the song [to play it elsewhere], it keeps growing like that.”

Those using NCS music in their videos are politely asked to list the song details and maybe add links to premium music services – but NCS will not take the music down if the user does not do this. It is largely left to good faith as opposed to the licence-first strategy of labels. “A lot of the big YouTubers always credit the artists,” he says. “But I don’t want to start bringing licences into it. I just want to keep in on trust that YouTube creators will credit us.”

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Alan Walker could soon be a superstar thanks to this new ecosystem. He got his break via NCS. The 18-year-old British-Norwegian uploaded his track Fade to YouTube via NoCopyrightSounds and gained huge interest. A rewrite and a remix of the song, as Faded, with a new top line, got him a deal with Sony Music Sweden and the video has now drawn 488m views – about a third of the views of Adele’s Hello.

“It struck me as a brilliant way to make music and to market music,” says Gunnar Greve Pettersen, Walker’s manager and co-writer on Faded. “What Alan had achieved when he was signed to NCS was a big reason why he treated it more like a marketing channel and a way to distribute his music. There is definitely a different approach and strategy within NCS and the other YouTube-based companies [compared with] the traditional music industry. They have completely opposite approaches in how to utilise YouTube and other digital platforms.”

Working hand-in-hand with NCS is AEI Group, which has invested in the company and provides infrastructure for it. They both operate under this new way of thinking that cuts free from the traditional approaches that they feel limits the new industry. Diluk Dias, MD of AEI Group, believes YouTube is a godsend. His company looks for music on SoundCloud, tests and builds it on YouTube and then makes money from Spotify streams, downloads and ticket sales.

“You should see YouTube as a platform for engagement and to build a relationship – to pull people into your paid funnels elsewhere,” Dias says. He feels YouTube channels have been key in building Faded’s popularity. For example, the track features in a video made by tech channel TechRax, in which someone drops an iPhone into a lava lamp. That video has now passed 14m views but was not monetised. Rather, it was seen as a way to extend the track’s reach.

“We have not used Content ID [YouTube’s copyright identification system] and have not set it to monetise the track,” says Dias of Faded. “We gave this piece of content to everyone on YouTube and invited them to distribute it far and wide. We put links to Spotify and iTunes in there and it got to 30m plays on Spotify fairly quickly. It was also doing a few thousand downloads a week on iTunes. We were not concerned about the monetisation [of use on other YouTube videos].”

The track is now on 405m streams on Spotify which means, based on its average per-stream rate of $.0007, it would have generated roughly $2.8m (£2.1m) in songwriting and recorded music royalties. YouTube was seen as pivotal in promoting the track and the thinking is that, without it, it would never have taken off on Spotify.

With its expansive reach and helpful data, YouTube is, in Dias’ eyes, more powerful than radio – which the music industry still sees as the kingmaker for hits.

“Radio is now almost the last place [we go to],” he says of how his own company’s promotional strategies and priorities have changed. “By the time you have built the record on streaming services and on YouTube, it’s already a hit and is already making money for you. For me that is hugely exciting.”

Facebook Twitter Pinterest Taylor Swift is one of a number of musicians to publicly take on YouTube, calling for better protections against copyright infringement and better pay for artists. Photograph: Kevin Mazur/(Credit too long, see caption)

James Gaster is the founder of Mahogany Sessions, a YouTube channel designed to showcase and break new acts. He believes YouTube has allowed his business to exist but also get to a point where it is big enough to attract brands and sponsors who will help bankroll what they do. The assault on YouTube is more political than is being let on, he says.

“With all the major label contracts coming up for renegotiation it makes absolute sense [to attack it],” Gaster explains. “These are huge businesses run by intelligent people and as much as it’s a mud-slinging exercise at the moment, I am hopeful they will reach a middle ground where artists are being [properly] remunerated and YouTube continues to grow its platform and its offerings to artists. YouTube has given us and many independent artists an audience and an opportunity to build a brand. That’s allowed us to exercise a business that goes far beyond what’s on YouTube.”

None of this is likely to change the minds of the major labels, major publishers and the “1%” of pop stars such as Paul McCartney, Elton John and Taylor Swift, who are steadfast in their belief that YouTube must be taken to task. But while their status means they dominate the headlines, their stance does not reflect the industry as a whole. Besides, the music business has never been completely united on any industry change, and YouTube is no exception.