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Lyor Cohen confirms YouTube music subscription service at SXSW

By | Published on Thursday 15 March 2018

Lyor Cohen

The music business needs to be more willing to embrace change. Just like Lyor Cohen has always embraced change. Or at least that was the overriding message of a keynote speech from Lyor Cohen at SXSW yesterday. All of which built up to the expected announcement that YouTube is launching a subscription music service.

The veteran record industry exec and now top YouTube music guy spoke for an hour, delivering his own perspective on his career to date in short bursts of words punctuated by music played by DJ D-Nice off to the side of the stage. He’s had a long and varied career, of course. This, he reckons, is down to his ability to accept any form of change that he encounters. There have been downs, but he’s always turned them into ups, he said, drifting dangerously close to “needless to say, I had the last laugh” territory at times.

In particular, he talked up how keen he was to embrace the internet when he became an executive at Warner Music in 2004, a single year after the launch of the iTunes store and a tiny decade after the invention of the MP3. “The internet had come and the business was going to change forever”, he said. “It was clear to everyone that easy access to music online was challenging the traditional music business model. But I like change. I didn’t feel threatened. I was focussed on the music. I saw the internet for what it was: the best possible way for an artist to get their music heard”.

The following year, some new-fangled start-up called YouTube was rapidly growing in popularity, and drawing attention from advertisers. Shortly before the company was sold to Google in November 2006, Cohen signed a licensing agreement with the platform, making Warner the first major label to do so.

“I embrace change, I’m built for it”, he insisted again. “And so I thought that ultimately this change was going to be a huge benefit for artists and labels. If you think about it, it’s always been really expensive in the traditional music business ecosystem. You had to press up records or cassettes or CDs. You had to buy warehouses, you had to store product. You had to spend money to ship it. You had to promote it in the stores. In that scenario, sometimes having a hit record for a little independent was the worst thing that could happen”.

“In the internet era, breaking a single can also mean making a video, putting it online, measuring it, seeing its reaction, and promoting it”, he continued. “I’m an optimist. I’m open to the possibilities”.

There was further change for Cohen in 2012 when he resigned from Warner Music. Although, with the benefit of hindsight, he recalls that departure in somewhat less amicable terms. “In the spirit of change, and ‘shit happens’, in September of 2012 I was pushed out of the Warner Music Group in what you call ‘a boardroom coup'”, he said. “It was without question the best thing that ever happened to me”.

Working at an executive level at a major label had taken him away from his “true love” of “signing and breaking artists”, he said. Predicting that “the tide was about to rise” in terms of income from advertising and subscription platforms, he decided to launch a new label, 300. He managed to “cobble together $15 million” in order to do this – including investment from Google. The industry “laughed like hyenas”, he said. Everyone thought it was a terrible time to launch a new label and that this would be a disaster.

But they were wrong, and the relatively small size of the company gave him a big advantage over the majors, he bragged on. “Before you knew it, we were having hits – Fetty Wap, Migos, Young Thug … If I wanted to sign an act, I went to a club and signed em. There was no A&R committee. When I walked in there, all the A&Rs from those big companies played the wall, cos they knew if I wanted it, I was getting that act”.

“I was having the best time of my life”, he said – one of several mantras that ran throughout the speech. But then YouTube’s Robert Kyncl asked him to help the Google platform – by that point fully embroiled in its full-on war with the music industry and verbally fist fighting with many of Cohen’s former colleagues in the major label system – to find a savvy industry insider to become its Global Head Of Music. A job he ultimately ended up taking himself.

Although things were going great at 300, he said that his big concern about the music industry at that point was the “diversity of distribution”. Or a lack thereof. This is a phrase he repeated several times during his keynote, though always failing to make it the rallying call he seemingly expected it to become each time. The point, he said, was that access to music was becoming “too highly consolidated between Apple and Spotify” and he was scared that “this could be a two horse race”.

Ignoring completely Amazon’s quiet growth in digital music, he then pitched YouTube as the company to break this stranglehold. “I realised that this was an opportunity for me to help Google and YouTube to work in harmony with an industry that I love, and to build a healthy business together”, he said. “I’m so excited, and I’m so proud of my colleagues and the mission that we’re on. And the effort that we’re making to work collaboratively with the industry, with the artists, with the labels, the publishers, the songwriters”.

Here, he confirmed YouTube’s plans to launch a subscription service for music – as rumoured since last year – which he said will combine “the best of Google Play’s context server, and the breadth and depth of YouTube’s catalogue”.

“We know we’re late to the party”, he conceded. “It’s OK. We’re making enormous investment to launch a product that you will be proud of … We’re going to collaborate and work closely with our label partners to understand their priorities and help them promote and break artists. Breaking artists is still my drug. I get to do it here at Google and YouTube on a massive scale around the world”.

Explaining why YouTube was better poised to do this than anyone else, he concluded: “We’re dedicated to giving artists, and labels, and their managers, the best direct-to-consumer access of any platform available. Spotify and Apple are pure retailers. Snapchat and Instagram are simply social. The most powerful aspect of YouTube is our ability to let the artists, managers, publishers, songwriters and labels to engage with their fans with no hoops to jump through”.

“Whether it’s promoting a video or an album, a live stream, the only place in the industry that you could play both in commerce and direct-to-consumer is YouTube. Let’s use it. Come on, and let’s harness it. Let’s seize this moment, this opportunity for us to actually work back to back with one another and build a really incredible and healthy business. Bring diversity to distribution, which will be great for artists and the labels”.

“I made a promise to this industry – this industry that’s been so good to me – to get Google and YouTube to work [with the music industry] and build a beautiful business together. Where it employs more people. Where more money gets flowing back to the artists and the songwriters and the labels. That’s my promise. I’m committed to fulfilling this promise”.

So, some bold words there, which build upon that much derided blog post he wrote last year as the music industry was busy trying to get copyright law rewritten in Europe to weaken YouTube’s negotiating hand. In that missive he said that the industry should stop moaning and wait for the big bucks to start rolling in.

Yesterday, he repeated his claim that the music industry is entering a golden era, where advertising and subscription income will return the music business to big growth. He particularly talked up how good this will be for all the new entrepreneurs out there who – he reckoned – have been locked out of the music industry for decades.

“Without the impresarios, the unemployables, the golden era could not be activated. We’re entering the golden era of this business. But we need the impresario to come back”.

Continuing with that theme, he said that he saw the launch of 300 as proof that entrepreneurial spirit can still bring success. Meanwhile the first half of his speech dwelled heavily on how he and Def Jam co-founder Russell Simmons made it as young men in the music industry by employing that entrepreneurial approach.

Of course, any run through Cohen’s professional history is going to include a hefty amount of Simmons’ story too. Though Simmons’ own story has been somewhat tarnished of late, of course, as a result of numerous allegations of rape and sexual assault against him. Aware that this is a developing news story involving his former colleague, Cohen addressed these accusations before discussing their early collaborations.

“I wanna acknowledge the awful allegations that have been made about Russell”, he said. “There is no question that Russell and I are very close. We didn’t just work together, we were roommates, and we’ve stayed friends and partners ever since. I never saw him aggressive or violent with any women. It’s not the Russell that I know. I’m deeply troubled about all the allegations, and there’s absolutely no room for this type of behaviour”.

Watch Cohen’s full keynote here:



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