August 15, 2012 at 2:23 pm

The Kids Think YouTube Is a Music Service — and They’re Right

justin bieber youtube most popular video music service

Justin Bieber's "Baby ft. Ludacris" is the most popular video on YouTube, the preferred music service of a new generation.

Market research firm Nielsen released its latest “Music 360” study this week, bringing a few revelations about how people discover and enjoy music these days. Among them: While only seven percent of music fans of all ages use YouTube to discover music, a whopping 64 percent of teens prefer to do their music listening on YouTube — more than on any other medium.

Radio, iTunes, and old-fashioned CDs took the next three spots, which means YouTube is by far the most popular music streaming service among these adults of the future. (Music player apps also scored well in the survey, with 54 percent of those surveyed reporting that they had at least one music app installed on their phones.)

So, does that make YouTube a music service? Warner Music Group seems to think so. In its widely-circulated earnings report, the major label reported that 25 percent of its digital revenue came from streaming service in the last quarter — about $54 million, according to AllThingsD. As AllThingsD mentioned in an update to that article, this streaming number includes streams on YouTube, which that article says constitutes “a significant income source for some corners of the business,” as well as its sister site Vevo.

Indeed, Google’s YouTube pays labels quite a bit when they “monetize” their videos by running pre-roll, overlaid, and display advertisements around the labels videos — even if the songs are used as the soundtrack to someone’s wedding video. Why can Google afford to license music while Grooveshark cannot? Well, Google is Google — and besides, videos garner higher ad rates than anything else online.

Let’s put these pieces together: Young people primarily use YouTube to listen to music, while WMG, the major label most notorious for resisting free online music, points to streaming services, including video, as constituting an ever-increasing percentage of revenue overall.

It’s time to stop thinking of YouTube as just a video service, and start thinking of it as a music service — especially among teens. Out of the top ten YouTube videos of all time, according to ReadWriteWeb, only one — “Charlie Bit My Finger – Again!” is not music. Other than that, it’s Bieber, Lopez, Shakira, Gaga, Eminem (twice), LMFAO, Michel Teló, and Don Omar.

Aside from those two Latin singers at the end, that pretty much reads as a list of “teenagers’ greatest hits.” This could be why YouTube no longer lists all of its most popular videos in a single list. Instead, it now breaks them up by category, possibly so that people don’t realize that this is where so many fans now primarily listen to music. (In that case, artists, songwriters, labels, and publishers, might want higher licensing fees — especially considering that Google is so flush.)

Not only do people listen on YouTube itself, but YouTube also powers a wide range of music apps. For all the press that Spotify apps get, and all the interest in Rdio apps among hackers at Music Hack Days, we’d be willing to bet that YouTube’s API powers more apps than Rdio and Spotify put together. So yes, YouTube is a free, on-demand music service, to put it mildly.

Here are the rest of the findings Nielsen distributed from its Music 360 report, which contains a few other surprises, including that over 48 percent of the 3,000 people surveyed for Neilsen’s report primarily discover music through the radio, whatever that is:

Radio is still the dominant way people discover music

  • 48% discover music most often through the radio
  • 10% discover music most often through friends/relatives
  • 7% discover music most often through YouTube

More teens listen to music through YouTube than through any other source

  • 64% of teens listen to music through YouTube
  • 56% of teens listen to music on the radio
  • 53% of teens listen to music through iTunes
  • 50% of teens listen to music on CD

Positive recommendations from a friend are most likely to influence purchase decisions

  • 54% are more likely to make a purchase based off a positive recommendation from a friend
  • 25% are more likely to make a purchase based off a music blog/chat rooms
  • 12% are more likely to make a purchase based off an endorsement from a brand
  • 8% of all respondents share music on social networking sites, while 6% upload music.

Music player apps are most prevalent, followed by radio and music store apps

Males purchase rock music most often, while females prefer top 40

  • 38% of males purchase rock most often
  • 15% of females (compared to 9% of males) purchase top 40 most often

Digital music is seen as a slightly better value than a physical CD

  • 63% of purchasers identified digital albums as a very or fairly good value
  • 61% identified digital tracks as a very or fairly good value
  • 55% identified physical CDs as a very or fairly good value

Younger consumers who do buy digital tracks, are more likely to purchase new music immediately after its release

  • 33% of teens purchased a digital track within one week of release
  • 21% of persons 18+ purchased a digital track within one week of release

36% of teens have bought a CD in the last year; 51% of teens have purchased some kind of music download

18-24 year olds are most likely to attend a music event (among those who attend any type of live event)

  • 7% attending once a week or more
  • 30% attending once a month

Although 18-24 year olds attend more live events, teens are more likely to purchase T-shirts and posters while there.

  • 54% (compared to 46% of 18-24 year olds) of teen attendees purchase concert tees
  • 14% (compared to 7% of 18-24 year olds) of teen attendees purchase concert posters

Listeners enjoy hearing movie soundtracks over music related TV shows or video games

  • 42% enjoy hearing music via music related TV show
  • 59% enjoy hearing music via movie soundtracks
  • 28% enjoy hearing music via music related video games

Older consumers have decreased their spending the most during the current economy

  • 41% of respondents 55+ reduced their spending to a large degree
  • 39% of respondents 45-54 reduced their spending to a large degree
  • Only 28% of respondents age 25-34 reduced their spending to a large degree
  • Perspective

    this is the premier music service.

  • Pano Anthos

    Teens use Youtube because its free and they get the video to boot.

  • rob

    The first paragraph is pretty misleading. Given the numbers at the end, it seems that youtube is only the greatest, common denominator, and not the preferred way of listening to music.

  • Taylor Trask

    For all the hype that Spotify gets, and while its a great service for some, YouTube will always win as long as it’s freely available and pre-loaded on every iOS and Android mobile device.