GOOG Alphabet Inc

By Hannah Karp 

A Korean pop star known as CL credits Alphabet Inc.'s YouTube with helping promote her music ahead of her first U.S. tour this fall -- but not just because her videos went viral on the free site.

Instead, YouTube invested in an array of marketing efforts to support the release of her first single and her tour, which went on sale the same day. YouTube bought advertising in music publications, helped land her song on FM radio and paid for a documentary and photo spread in the Fader magazine. It also produced several videos including a primer for new listeners called "Meet CL," and another of a plane writing her name in the sky.

"They helped me spread my music and connect with new fans," said CL, whose real name is Lee Chaerin.

The 25-year-old Korean singer and rapper is one of several acts that YouTube has quietly invested in this year as it seeks to help artists increase their fan bases and achieve success -- which in turn can boost video and ad views on its site.

YouTube this year has been meeting with major record companies and artist-management firms, asking which acts they want help developing and then offering financial support for custom-tailored marketing campaigns -- something it hasn't done in the past for musicians.

"We are continually discussing what we can do to further the amplification of the promotion we are providing," said YouTube's global head of artist and label relations, Vivien Lewit. She declined to say how many such marketing campaigns YouTube is funding or what it is spending on the efforts.

YouTube is aiming to increase its value to artists, managers and labels amid mounting tension over the relatively low royalty rates it pays to stream their music. YouTube says it has paid more than $3 billion to music creators since it launched a decade ago -- and pays more, in aggregate, each year. It says it paid more than $1 billion in ad revenue over the past 12 months. While it makes payouts based on a percentage of ad revenue as per its licensing agreements, the amount artists and labels get on a per-stream basis has been declining as YouTube's audience balloons beyond 1 billion monthly users, leading to complaints from some of these rights holders.

Adding to the tension is the fact that while YouTube's global reach can help artists build their fan bases and sell concert tickets, it doesn't necessarily help their record companies to sell their music, since fans can listen to the tunes on YouTube free. Instead, many label executives believe YouTube hurts record sales and is impeding the growth of subscription streaming.

Still, all three major record companies are in negotiations to renew the deals that allow them to share ad revenue when their music is streamed on YouTube's site. Many major-label executives say they are reluctant to forfeit the revenue they do get from YouTube.

Federal law protects YouTube from liability when its users upload tunes without the labels' permission, making their music likely to surface on the site whether they license it or not. YouTube offers a system to help labels block, mute or monetize unauthorized uploads, but it isn't foolproof. Other executives are considering letting their deals expire and taking their labels' music off YouTube altogether, though they worry that such a move could cost them artists and fans.

Ms. Lewit said YouTube's new artist-marketing efforts aren't a direct response to the music industry's growing criticism of what it pays creators, but rather are aimed at helping artists amass new fans who aren't necessarily already on the free site. These are new viewers to whom YouTube can advertise. Streaming services including Spotify AB and Apple Inc.'s Apple Music have been funding similar marketing campaigns for artists that serve both to promote the act's new tunes and to advertise the music service by association.

These companies are hoping that the more artists engage with their services, the more fans will engage with them as well.

CL landed YouTube's financial support after YouTube executives earlier this year approached her manager, Scooter Braun, and asked which acts they could help his management firm, SB Projects, promote. Mr. Braun's other clients include pop singer Justin Bieber and hip-hop star Kanye West.

Jules Ferree, head of brand partnerships for SB Projects, said her team nominated CL in hopes of expanding her American fan base.

Though CL had risen to fame in Korea headlining two world tours as the lead singer of the Korean pop group 2NE1, she still isn't a household name in the U.S. after signing with SB Projects in 2014.

Ms. Ferree said while some in the music industry have said the rates YouTube effectively pays artists per stream are frustrating, the new program appeared to be aimed at easing "these exact frustrations."

"It goes beyond the economics of the pay per stream," said Ms. Ferree.

Since YouTube began its promotional efforts for CL in August, the number of subscribers to her YouTube channel has grown by 51,000, or 20%, while 99% of her videos' views have come from nonsubscribers, suggesting that the marketing has significantly broadened her audience, Ms. Ferree said.

Write to Hannah Karp at hannah.karp@wsj.com

(END) Dow Jones Newswires

December 16, 2016 20:29 ET (01:29 GMT)

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