According to the annual Digital Music Report released this week by the IFPI, an organisation that represents 1,300 music publishing companies around the world, the recording industry is making more money from fan-made mashups, lip-syncs and tributes on YouTube than from official music videos. The report also states that overall digital revenues for the industry grew from $4 billion in 2008 to $5.9 billion in 2013, with a 51.3% increase in subscription streaming revenues year on year. That’s good news for the global music industry, that saw a decline in revenues of 3.9 per cent to about $15 billion.

Commenting on the revenue from mashups on YouTube, Francis Keeling, the global head of digital business for Universal Music Group said “It’s a massive growth area. We’re very excited about the creativity of consumers using our repertoire and creating their own versions of our videos.”

User-generated Content and Ad Revenue

When labels get a notice of a copyright infringement on YouTube, rather than order the video removed, the company can instead choose to run ads before and during the video, making money off the video’s views. “User-generated content, which includes mashups and fan-made music videos, are actually generating more money for record labels than the official music videos posted by record labels,” Keeling said. “A lot of that is due to consumers putting more and more repertoire and new versions up there, but also it’s YouTube getting better at advertising.”

The IFIP report also says:

Revenues from advertising-supported streaming services, such as YouTube and Vevo, are also growing — up 17.6 per cent in 2013. Music video revenues in particular increased as the industry extended the monetization of YouTube to more than 50 countries, adding 13 territories in 2013. Vevo has performed
strongly, hitting 5.5 billion monthly views in December 2013, a 46 per cent year-on-year increase, and attracting 243 million unique viewers worldwide.

YouTube is also expected to roll out a premium subscription service in 2014, providing another source of revenue, according to the report. Ironically – on a side note – some countries, such as the U.S. and the U.K., sales of vinyl actually increased by as much as 100 per cent – led by those who want to go back to the good old days.