YouTube Acquires BandPage
Last week YouTube acquired BandPage, a San Francisco-based site designed to deliver and sell content to music fans. BandPage has 500,000 artists featured on the site. The acquisition was made for $8 million. BandPage is used as a hub to link fans to content such as streaming, social media, merch and ticket outlets. It allows artists to automatically update their profiles on sites such as Facebook, Twitter, SoundCloud, Spotify and other similar services. It allows a high level of customisation on artists’ pages, and also on the services which can be sold to consumers.
YouTube struggles to turn profit
YouTube is a Google-subsidiary that has one billion active users and turns $4 billion in annual revenue. However the video streaming site still only manages to break even. A key issue is that most of YouTube’s traffic comes from users streaming videos that are embedded in other sites. YouTube’s previous efforts to make users spend more time on the site itself have not been very successful. YouTube tried paying content-producers to create television-like channels. However most of these channels have failed to take off.
BandPage success with revenue raising from streaming
The majority of the most popular videos on YouTube are music videos, so BandPage is a natural choice for expansion. It seems YouTube is looking to capitalise on BandPage’s ability to turn fan hits into revenue. BandPage has a good track record for optimising revenue and fan engagement. Founder and CEO James Sider reported that the site produces clicks at double the rate of Google Search ads, 10x the rate of Facebook ads, and at over 50x the rate of traditional web display advertising.
Sider also has a proven ability to steer the ship to safe waters when changes are thrust upon the site rapidly. He founded BandPage in 2009. It was initially designed as an app to create a music tab on musician’s Facebook pages. In 2012 Facebook ended this functionality and sent BandPage into a spin. It lost 90 per cent of its traffic in three months. The site responded by launching BandPage Everywhere, which enabled musicians to upload content from a single admin interface onto a variety of sites, through embeddable widgets. The diversification allowed BangPage to survive and recover. BandPage Everywhere was initially free, although it encouraged users to pay $2 monthly for additional features. Last year BandPage removed the fee. To raise funds the site now imposes a 15 per cent transaction fee for e-commerce sales. Sider had the following to say about the YouTube acquisition:
“We believe YouTube truly shares our commitment to musicians. YouTube already offers a global distribution platform for any artist to be discovered and some of the best self-publishing tools for musicians and other creators. The team has a lot of things planned to help musicians succeed on the platform, and more broadly across the BandPage network. There’s still a lot that we can do to help musicians, and we can accomplish so much more together… Our collective goal remains the same: to grow an open network of digital music services, develop intelligent new tools for managing/distributing artist content and commerce, and create new revenue opportunities for all musicians, on YouTube and beyond.”
Hopefully Sider’s optimistic view of the acquisition is correct. However his words should be taken with a grain of salt. RIAA statistics indicate 52 per cent of streaming music consumption is done through YouTube. However the site is responsible for only 13.5 per cent of revenue in this area. Unsigned artists can expect remuneration as low as $0.0003 per play on YouTube.
YouTube Acquires BandPage as part of larger strategy
In October last year YouTube launched Red, a $9.99 per month ad-free subscription service. The following month YouTube also released its dedicated music app. The app is free although enhanced functionality is available for YouTube Red subscribers. The acquisition of BandPage is no doubt another piece of the puzzle in YouTube’s efforts to more successfully monetise music streaming. BandPage’s tools for selling content could help increase revenue opportunities on YouTube. It would therefore encourage artists to direct fans to their YouTube channels. Exclusive content from musicians on Red will no doubt be used as a selling point for the service. Artists will be encouraged to take part by the increased revenue opportunities offered by providing fans this content.