A New Way for Musicians to Make Money on YouTube 2015

Scott Schreer is an indie musician, but not the garage-band variety. The composer licenses his 1,700 musical works, designed as scenic background music, to film and TV producers. Less gratifyingly, he can also hear them used, without permission, in thousands of videos on YouTube. Hunting those stray recordings and trying to collect licensing fees from the video-sharing Google (GOOG) subsidiary didn’t seem worth the trouble. Then Schreer started using Audiam.

Audiam’s program combs YouTube for videos that feature unlicensed music, using audio-matching software and YouTube’s own ContentID system. If there are advertisements running on the videos that include its clients’ songs, New York-based Audiam claims a share of the ad revenue; if there aren’t any ads attached, Audiam authorizes YouTube to add some. Either way, the startup passes along ad revenue to the artist, minus its 25 percent cut. Founder Jeff Price, a friend of Schreer’s, pitches musicians like this: “Let’s go find you money that already exists. It’s buried treasure.”

Although big record companies and music publishers have deals with YouTube to collect rights fees when their songs show up in videos, lesser-known artists and composers don’t, and Price wants Audiam to be their middleman. (Artists can sign up for free, in exchange for song uploads and YouTube licensing rights.) Price’s six-employee startup has attracted about 700 musicians since its mid-June launch, and Schreer is an ideal test case: A May Audiam search for just one of his 1,700 songs, a two-minute, saxophone-heavy acid-jazz instrumental called Love Doctor, revealed 100,000 video plays using the song without paying for it over a period of 11 days. That search netted Schreer $120 in licensing fees from YouTube, he says. He’s collecting about $30,000 a month overall from his music catalog.

Price has helped indie artists before: In 2006 he co-founded TuneCore, which made deals with iTunes and other digital music distributors to allow unsigned musicians to sell downloads. He and co-founder Peter Wells were ousted by TuneCore’s board last year with no public explanation. Price says he was terminated without cause—the company didn’t respond to requests for comment—and he launched Audiam as his next act.

Price picked a giant, lucrative target in YouTube, which streams 6 billion hours of video each month. Martin Pyykkonen, a senior analyst at market researcher Wedge Partners, estimates that YouTube contributes 10 percent of Google’s revenue, which topped $50 billion last year. That would put YouTube’s revenue at about half of what’s spent on billboard advertising in the U.S.

Few Audiam clients will see the kind of cash that Schreer earns from his work. A garage band with a couple of albums can expect “a little extra gravy,” says Aram Sinnreich, a media professor at Rutgers University and author of the forthcoming book The Piracy Crusade. And Sinnreich says Audiam’s 25 percent cut is steep: Other organizations that collect royalties for performers and songwriters, such as Ascap and BMI, typically take about 10 percent. (Price maintains that those groups take a bigger cut of YouTube royalties; Ascap and BMI didn’t respond to queries.)

Still, Sinnreich says, Audiam is poised to benefit from music consumers’ shifting habits. “The writing is essentially on the wall for the download model,” he says, as fans switch from buying music on iTunes to using YouTube or streaming songs on sites such as Spotify and Pandora (P). That’s proving to be a lousy way for even successful artists to earn money, and plenty of striving musicians would welcome revenue from YouTube clicks. “There are tens of thousands, maybe hundreds of thousands of independent composers and performers whose work does appear on sites like YouTube,” Sinnreich says.

And if a song such as Love Doctor happens to show up on a video that achieves the reach of Gangnam Style, Audiam can make sure the musicians get their due. Says Schreer, “If someone takes the music you wrote as a garage guy in Minneapolis and puts it into a cat video that goes viral, you’re doing pretty well.”