CloseImage 1 of 3 Lyor Cohen, global head of YouTube Music, says the record industry needed to go through an upheaval in order to thrive. Lyor Cohen, global head of YouTube Music, says the record industry needed to go through an upheaval in order to thrive. Photo: Photos By Michael Macor / The Chronicle Image 2 of 3 A smartphone can access the equivalent of a record store. A smartphone can access the equivalent of a record store. Photo: Michael Macor / The Chronicle Image 3 of 3 YouTube executives T. Jay Fowler (left) and Lyor Cohen tout the company’s new music service, which is designed to compete against Apple and Spotify. YouTube executives T. Jay Fowler (left) and Lyor Cohen tout the company’s new music service, which is designed to compete against Apple and Spotify. Photo: Michael Macor / The Chronicle Record industry headed for new ‘golden age,’ YouTube Music boss predicts 1 / 3 Back to Gallery
Record industry executive Lyor Cohen built his career before physical record stores became dinosaurs and digital music laid waste to the industry’s revenues.
Now global head of YouTube Music, Cohen believes the recording industry is in the midst of a major resurgence. And he dreams that YouTube’s service, which begins to roll out Tuesday, will become as important a distribution point for the industry as Tower Records was during his days as head of hip-hop giant Def Jam Recordings.
“We’re entering the golden era of the music business right now,” Cohen said during a recent interview with The Chronicle. “Every forest has to burn down to get healthy again. It had to happen.”
The former chairman and CEO of Warner Music Group left his latest label, 300 Entertainment, in 2016 after more than three decades in the traditional recording business to join Google-owned YouTube and bolster its ability to compete in streaming music.
Under Cohen, Google merged employee teams working on Google Play and YouTube music services. On Tuesday, the company will begin offering the free, ad-supported service YouTube Music and a $9.99 per month ad-free premium subscription that will eventually replace Google Play’s premium service and YouTube Red, YouTube’s movie and original TV series service.
The industry underwent a massive upheaval after the original (but outlawed) Napster popularized digital-music downloading while sending revenues into a 15-year-long tailspin. Worldwide recording industry revenue was $17.3 billion in 2017, only 68.4 percent of its all-time peak-year level in 1999, when CD sales began to slide, according to the International Federation of the Phonographic Industry.
“I feel liberated from the CD,” Cohen said. “I’m so happy it’s dead. It’s time to move on.”
The industry had thought digital downloading of songs and albums was its savior. Yet Apple’s iTunes quickly cornered the market, and the industry complained that the Cupertino company held too much power.
Now, downloading is dying, while revenue from streaming services led by Spotify and Apple Music rose 41 percent in 2017 and now represents 54 percent of the market, the IFPI said.
Apple Music and Spotify have nearly 50 million monthly unique users each, according to the research firm Verto Analytics. Google Play Music has about 22 million.
Cohen said he joined the digital music side of the war because he “was terrified” the streaming music field could become a “two-horse race” that wouldn’t benefit artists or consumers. He hopes the offerings by Google and YouTube will inject more competition into the field, just as when there were thousands of retailers like the Sacramento-born Tower Records.
“It’s insane thinking that this smartphone has created the ability for Sam Goody and Tower Records to be in your pocket,” he said.
However, longtime record industry analyst Russ Crupnick said YouTube Music is “late to the party” in an already crowded field, and the number of Google Play Music subscribers is far behind Spotify, Apple, Amazon and Pandora.
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“They’re going to be playing catch-up,” said Crupnick, managing partner for research firm MusicWatch. “The good news is a lot of people haven’t selected a paid service yet. There’s a lot of land area to be cultivated here. The bad news is they got some pretty good competition.”
Still, Crupnick believes streaming services could become key distributors of music, as Walmart, Best Buy and Target became for the industry in the late 1990s for CDs. And he said Cohen’s prediction that the recording industry could become even more lucrative than ever isn’t overly optimistic, given the global reach of streaming services.
“If anybody can do it, he can,” Crupnick said.
Cohen said YouTube Music doesn’t need to knock Spotify or Apple from the top to succeed. “This is not a ‘winner win all’ category,” he said. “This is a category that can have many players. The fact that there are many players is really healthy for everybody.”
Source : https://www.sfchronicle.com/business/article/Record-industry-headed-for-new-golden-age-12932254.php