Karra, bifurcation and YouTube’s gainA couple of weeks ago, electronic music artist Karra posted a video on YouTube about why she took her album down from streaming (one that she spent $100,000 making) and is now going to focus her efforts on YouTube (“an incredible platform for [her] artistry”) as well as selling content to music creators. The details in here will be familiar to most and many of them (fraud, bots, demonetisation, fractional royalties, slow payments, lack of support) are widely recognised as ‘industry glitches’. But when they are all stitched together, they can become an insurmountable challenge for independent creators. Big labels and publishers have the organisational scale to swat these glitches away like flies, but for creators doing everything on their own, it can make the system feel rigged against them. Karra’s solution was to opt out of the streaming economy entirely. Is she an outlier, or a sign of Bifurcation gathering pace?

Karra’s story is one of an artist trying to do what a label artist would do (co-writers, mixing and mastering, photoshoots, videos etc) but on her own. The result was a wholly professional release but because she lacked the operational resources of a record label, all of the glitches (canvass not uploading, social not monetising, music taking down for suspected fraudulent activity, fraudsters posting to her streaming profile, dodgy merch companies not paying etc) simply became too much. The kicker though was that her streaming royalties added up to little more than one percent of her outlay. Sure, if the album had been more successful or if she had spent less making it, that equation might have changed but this was an album with over a million streams, so not nothing. The kicker however, is that her YouTube video telling the story generated more revenue in one week than the album did on streaming in one year. 

There may not be many artists who depend upon streaming royalties to pay their bills, instead using it to fuel their core income streams (live, merch etc). But when the investment and effort vs rewards equation is so imbalanced, it is not surprising that a growing number of creators are now looking elsewhere. Among the non-DSP artists MIDiA has been tracking, YouTube keeps coming up as the place they turn to. Creating ‘content’ on YouTube is not of course for all artists, but now, neither is streaming. The reality of today’s music business may be fragmentation and complexity but this also means that artists now have more paths they can follow. 

The flipside of the complexity and fragmentation is that this strengthens the case for record labels. The depth and breadth of expertise needed to navigate today’s music business simply cannot be recreated by an independent creator’s own team. The likely implication is that successful independent creators have a choice between staying independent but specialising on one or two platforms, or working with a label to work across all of them.

An interesting additional element to the case for YouTube is that it enables artists to tell their story. As we enter the AI era, story telling has never been more important for artists to differentiate from something generated by a text prompt. As Mary Spender puts it, YouTube can play the role of ‘proof of work’. If / when AI music swamps streaming, not only will artists face royalty dilution and attention competition, they will have no meaningful way of communicating their ‘human-ness’ there. Unlike, of course, YouTube.

Streaming’s problems are a combination of self-inflicted injuries, industry dysfunction and unscrupulous third-party behaviour. Fixes are needed from both within and without. While larger rightsholders might look at this and think that these are little more than glitches for their businesses, if streaming fails, they fail. For all its creator-level faults, streaming works well at the rightsholder level. Rightsholders revenues are now dominated by streaming. As we first outlined in Bifurcation Theory in early 2024, streaming’s problems are opportunities for the expanding, non-DSP side of the music business. With a growing body of newer, younger creators prioritising YouTube and social over streaming, it will only be a matter of time before this starts translating into a clear culture-shift. Expect that to happen even faster if Gen AI starts to dominate functional playlists on streaming. YouTube will be waiting with open arms.

Keep an eye out for MIDiA’s forthcoming ‘Future of Streaming’ report that uses conversations with streaming’s leaders to present a bold vision for the industry’s future.