YouTube's Content Evolution Puts Pressure on Music Industry Revenue
As YouTube continues to emphasize long-form creator content and its Shorts feature, particularly with the growing adoption of connected television sets, Indian music labels are experiencing significant pressure on their advertising income. These labels have traditionally relied on YouTube as a primary digital revenue source, but recent shifts in platform dynamics are challenging this dependency.
Declining Ad Revenue for Music Content
Industry executives report that YouTube advertising income for music labels has decreased by 20-30% in recent periods. This decline becomes particularly pronounced when film soundtracks fail to achieve breakout success or when movies don't gain organic traction among viewers. The trend has been observable across several recent film releases, with notable exceptions like the action hit Dhurandhar, whose soundtrack achieved immediate popularity across multiple platforms.
Mandar Thakur, Chief Executive Officer of Times Music, explained this shift in perspective: "YouTube was built as a platform that is all things for all people, and not simply as a music service. Although in the last decade and a half, music became an integral and scalable part of the overall consumption on the platform, now other forms of content are making more noise as YouTube replaces traditional television."
Thakur further elaborated on the consequences: "As a result of that consumption shift, YouTube is also playing catch-up to a newer generation of music fans and there is a significant drop in income for music within that area as advertisers also change their spend habits."
Algorithmic Changes Reshape Content Discovery
Gaurav Dagaonkar, Co-founder and CEO of music licensing platform Hoopr, clarified that YouTube hasn't deliberately deprioritized music as a content category. Instead, the platform has embraced an audience-first, engagement-driven algorithmic model that fundamentally changes how content gets discovered.
"Discovery today is governed far less by content labels and far more by how viewers behave—signals such as watch time, retention, repeat listens, and contextual relevance now determine visibility," Dagaonkar explained. "For music, this means performance is increasingly dynamic. Reach can fluctuate not because music is being sidelined, but because discovery is tied directly to how audiences are engaging with a track at any given moment—whether they're watching through, replaying, sharing, or interacting across formats like long-form, Shorts, and connected content."
He emphasized that "in that sense, music is being treated no differently from any other content vertical" on the platform.
Music Labels Adapt Their Strategies
In response to these platform changes, music labels are actively recalibrating their approaches. According to Dagaonkar, there's now a sharper focus on several key areas:
- Data-led marketing initiatives
- Shorts-first release strategies
- Deeper collaborations with creators
- Regionally rooted storytelling that mirrors contemporary audience consumption patterns
Simultaneously, labels are diversifying their revenue streams through sync licensing and brand partnerships. This strategic shift aims to reduce dependence on any single platform or algorithm while building more resilient, multi-channel monetization models that can withstand platform policy changes.
YouTube's Perspective on the Ecosystem
A YouTube spokesperson addressed these concerns by stating the company's commitment to all creatives thriving on its platform. The spokesperson emphasized that YouTube's revenue-sharing business model means "it succeeds only when its partners do."
"To ensure a healthy and equitable global ecosystem, our agreements with our music partners should remain fair and reflect how users consume content across genres on YouTube today," the spokesperson explained. "Our 'twin engine' of ads and subscriptions are key revenue drivers, and we remain as committed as ever to collaborate with our music partners."
From July 2024 to June 2025, YouTube paid out over $8 billion to the global music industry, demonstrating the platform's continued financial contribution to the sector despite the evolving content landscape.
Broader Platform Evolution Beyond Music
Industry experts agree that YouTube has transformed beyond being merely a long-form video or music platform. Tusharr Kumar, CEO of media and entertainment company Only Much Louder, noted that "micro stories, influencer-led formats, live content and creator-driven entertainment now command massive daily watch time."
Kumar explained that "YouTube is investing in making these formats monetizable and scalable" while clarifying that "it is less about replacing music, comedy or more established genres and more about expanding the ecosystem to match how audiences consume content today."
Concurrently, YouTube is implementing stricter rules to reward original, engaging content while reducing low-effort uploads. This broader revision aims to improve overall platform quality and fairness rather than specifically deprioritizing music content.
Kumar added that "music continues to drive large watch hours and payouts" but acknowledged that "revenue calculations—especially in short-form contexts—are evolving in line with YouTube's broader platform strategy." This evolution reflects the platform's adaptation to changing viewer behaviors and the competitive digital content landscape.
