The dust is just starting to settle after a leaked memo from Warner Music Group CEO Stephen Cooper surfaced late last Friday (May 5) that seemed to both celebrate reaching a new deal with YouTube and at the same time expressed frustration in negotiating with the video platform with its perceived value gap and inability to control and monetize unlicensed content.
This week, in a revealing interview between ReCode's Peter Kafka and Lyor Cohen, the former CEO and president of recorded music at Warner Music Group -- who currently serves as YouTube's head of global music -- expressed his dismay at Cooper's statements. Here too, the longtime music industry veteran explained how his former protége at Atlantic, current co-CEO Julie Greenwald, encouraged him to clamp down on Google's search giving prominence to pirated content and expressed his excitement over an upcoming merch and ticketing initiative with Live Nation.
In regard to Cooper's memo, Cohen said he was "surprised" because the issues Cooper had raised in his memo had "not been the context or the tenor of the negotiations" and he claimed to be "really impressed with how Steve and his team have been thinking about it." He said he never heard Cooper say anything about "safe harbor," which Cooper had mentioned in his memo, and that this new deal was geared towards both companies' shared interest in building the video platform's music subscription and advertising-based businesses.
Cohen twice mentioned the shared goal of increasing ARPU (average revenue per user), which he feels can only happen with both subscription and advertising working side-by-side. He also spoke on the importance of the global market and obtaining international rights towards achieving that goal. He went into further detail on how developing markets such as India might be better suited now for ad-based tiers rather than $120-per-year subscriptions, which is the cost that both Spotify and Apple Music, to name the top U.S.-based streamers, charge for ad-free subscriptions in the U.S.
When Kafka asked if Universal and Sony would re-up their deals with YouTube, Cohen pointed to the success of YouTube's subscription tier, though he didn't quantify its paid user numbers (which as of last summer stood at 2.5 million users a month).
The former label head seemed to get testy when asked about the frustration the labels feel towards YouTube. "I can tell you that I would not be at a company that doesn’t do three things," Cohen said: "Respect artists, and labels, and be committed to building a subscription business where they could identify the most likely users to shepherd them to a higher ARPU, via subscription. Period."
Atlantic Records' Julie Greenwald reportedly asked Cohen personally to do something about Google searches that listed unlicensed albums first. In his first week, Cohen said he located the team responsible for Content ID in Zurich, and flew there to meet with them.
Cohen claimed he was impressed by the team which he said knew of the issue and who explained how "bad actors" actually change the tempo of music to elude copyright systems. "We’ve already got a solution for it,” the Content ID team told him. And they're "dedicated to fixing this,” Cohen added.
While he didn't mention specifics, Cohen said he intends to "surface up [the labels'] priorities and have their input on what’s important to them."
He also noted one important aspect he hadn't previously realized: That "80 percent of all of watch time is recommended by YouTube," which will likely mean working closer with labels to get their input on recommendations which theoretically can help market and promote their artist priorities.
While there was much talk of "bringing more cake to the party," meaning expanding the business and revenues for all, one specific initiative soon to be launched, according to Cohen, is a partnership with Live Nation which will bring ticketing and merch to the video platform.
Interesting for sure are the vastly different spins the former WMG colleagues came away with from their deal. But one thing's for certain given the relatively short term of the agreement: It's all still to be continued.
