If someone had told us in 2011 that in 2012 a portly South Korean rapper would take the world by storm, delighting clubgoers and desk potatoes alike while capturing the crown for the most popular YouTube video of all time, we might have believed it. Stranger things have happened.
So, what does it mean, money-wise, to have the most popular YouTube video of all time — considering that, unlike the Susan Boyle mistake of 2009, this video was “monetized,” in the YouTube parlance, with pre-roll and other advertisements?
According to Quartz, Google chief business officer Nikesh Arora announced in a Google earnings call that Psy’s “Gangnam Style” generated $8 million on YouTube from 1.23 billion views. (Only three years ago, Boyle threatened to top the charts with a mere 100 million views, indicating that super-popular videos are getting even more super-popular.)
Update: A Google spokeswoman tells Evolver.fm that Arora’s exact words in the earnings call were: “Outside estimate say that video on which I am sure all of you have seen of Psy, his hit song, Gangnam Style, now the most watched YouTube video for all times, it generated over $8 million in all-in advertising deal.” We’re not sure why Arora used an outside estimate, since YouTube administers its own monetization program from what we understand, but we feel we should note that here.
By Quartz’ calculations, which we are running past Google for verification, that means YouTube generated 0.65 cents per play for this video. That’s a lot, even though the same article says half the revenue generated from YouTube ads go to YouTube, putting Psy’s take at $4 million, from 0.325 cents per play.
Conventional wisdom dictates that even though YouTube has become a music service, especially among the young, it doesn’t make as much money for artists and labels as on-demand subscriptions like MOG, Rhapsody, Rdio, or Spotify. Is that wisdom correct? Apparently, but not by as strong a margin as we’d thought.
Calculations vary about how much those services pay out. One indie label pegged the per-play rates last summer (likely earlier) at between 0.05 and 0.28 cents per song, which would put YouTube’s payout for “Gangnam Style” above what the song would have made on every service except for Microsoft’s (now called Xbox Music). However, those numbers are old.
To take another somewhat random sample, an NPR source said Spotify’s payout was about .4 cents per play — reportedly a little more than YouTube reportedly paid Psy. The Next Web’s source (the band Parks and Gardens) said he makes 0.97 cents per play on Spotify, which is about 3x what Quartz says YouTube paid Psy and his label.
So, calculations vary widely for how much Spotify pays out — and as we’ve pointed out before, many of these estimates are out of date (i.e. way too low). And judging from the most recent one, Spotify (for an average band) pays 3x what YouTube does (for the top video of all time).
If these new calculations (which we are trying to verify with Google) are correct, YouTube’s payouts aren’t as low relative to “pure play” music services as we and others had thought — although pure-play music services certainly do pay out more than YouTube does, on a per-play basis, and with a higher volume in some cases.