Issue 243,  published January 28, 2020

The Economics of 24/7 Lo-Fi Hip-Hop YouTube Livestreams

With their instantly recognizable combination of nostalgic, mellow, boombap beats and colorful, anime-inspired looping GIFs, 24/7 lo-fi hip-hop livestreams on YouTube have won the hearts and studious minds of millions of listeners. Much ink has been spilled on the scene’s swift rise, dynamic community and perhaps problematically leanback nature over the past several years.

Today, I’d like to focus on an angle that has not been explored in depth yet: how, if at all, do the artists, labels and curators in this scene sustain themselves financially? And how are they approaching their future growth and evolution, as the lo-fi hip-hop economy becomes ever more saturated and commoditized?

But first, a brief history: As a musical style, lo-fi (short for “low-fidelity”) hip-hop has been around for decades. In the ‘90s, producers like J Dilla, Madlib and Nujabes pioneered the nostalgic, downtempo, mellow boombap beats that define the genre’s sound today. The culture has also been highly visual from the very beginning, with TV channels like Adult Swim featuring lo-fi beats in their programming and helping to bring the sound to a mainstream audience. However, the 24/7 lo-fi hip-hop ecosystem as most people know it today didn’t take shape until 2013, when YouTube opened up native live-streaming capabilities to any channel on the platform with 100 or more subscribers.

If you search “lofi hip hop livestream” on YouTube right now, you’ll find over 30 different live broadcasts dedicated to the genre. The most popular ones, from the channels ChilledCow, Chillhop Music and College Music — all run by white European men in their twenties, I should say — attract as many as 20,000 concurrent viewers or more at any given time.

In terms of presentation and content, these broadcasts follow more or less the same formula. Their titles are all structured in a way that makes their functional use cases clear and SEO-friendly (e.g. “lofi hip hop radio – beats to relax/study to” or “vocal lofi hip hop radio – emotional/late night beats”). The featured songs are brief, sample-heavy instrumental vignettes that typically last no longer than 2.5 minutes each. And while the songs are short, the user engagement lasts much longer, with the average watch time clocking in at over 50 minutes for some broadcasts.

The kicker, though, is that while YouTube has become the primary gathering space and watering hole for the modern lo-fi hip-hop community, it is not the sector’s primary revenue stream.

All of the lo-fi artists and producers I spoke to for this piece said they never got compensated for their songs being played on YouTube livestreams… and, intriguingly, they were totally OK with that. This is partly reflective of lo-fi hip-hop’s persistent DIY ethos, whereby artists and labels are typically happy to forgo revenue and give curation channels a non-exclusive, royalty-free license to stream their music in exchange for exposure to a loyal and engaged community. (Interestingly, to my knowledge, this approach has not led to any takedowns of livestreams due to copyright infringement claims related to the music itself; all publicly-reported takedowns so far have been due to infringements on visual media, such as Chillhop’s allegedly unauthorized use of a clip from the Japanese film Wolf Children.)

But the lack of payment is also partly indicative of infrastructural and financial struggles that the livestream channels face themselves, particularly around advertising. Unlike with other types of longform YouTube videos, 24/7 lo-fi hip-hop livestreams tend to serve only one pre-roll ad to viewers when they first visit the broadcast, then no ads for the remainder of their time on the page. The result is disproportionately low ad revenue, despite longer engagement from viewers.

Let’s walk through a concrete example of this gap. College Music was generous enough to share some lifetime watch-time and view-duration stats for its “vocal lofi” livestream, which has been active since September 2019 (screenshot below).

[Screenshot courtesy of College Music]

From September 16, 2019 to January 21, 2020, the livestream generated 38 million minutes of watch time, with an average view duration of 52 minutes — implying around 750,000 total lifetime views, as of last week. Assuming YouTube’s average per-stream royalty rate is around $0.001 (this figure may vary widely in tandem with ad rates at large), that would put College Music’s lifetime revenue from this single video at only around $1,300. To split that money among every single song played in the video over the last 4 months would be costly and unrealistic.

Facing paltry YouTube revenue, many lo-fi hip-hop channels have ventured beyond just curation and founded their own record labels, in order to build up a catalog that can be monetized elsewhere (e.g. on Spotify and Apple Music) in a more lucrative manner. Most of these labels sign non-exclusive deals with individual singles, rather than albums — meaning that artists can choose to release said singles with other labels as well, which can be useful for getting featured on several lo-fi compilations and mixes at once.

Chillhop Music is perhaps the most notable example of this transition. Founded as a YouTube curation channel in 2013, the brand has since established a label and publishing division, with around 25 total in-house staff. Even though Chillhop still commands a significant audience on YouTube, Spotify now accounts for the vast majority of the brand’s revenue; the company’s CEO Bas van Leeuwen tells me that Chillhop’s label catalog generated over 1.1 billion streams on Spotify in 2019, implying between $5 million and $8 million in annual revenue from that platform alone (assuming a $0.005–$0.007 average per-stream royalty rate). “While YouTube is still one of the only platforms where you can build up an audience and talk to them, from a label perspective we actually prefer if people listened to our catalog on Spotify instead of on our livestreams,” says van Leeuwen.

At large, lo-fi now has a significant presence on Spotify, with playlists like Lo-Fi Beats and Jazz Vibes commanding millions of followers (ChilledCow and Chillhop also maintain their own Spotify playlists that tout over one million followers each). But this has also led to highly inflated streaming stats around lo-fi hip-hop that don’t actually reflect artists’ popularity. Because the average listener treats a lo-fi hip-hop playlist as background fodder for other activities (like relaxing, sleeping or focusing), actual recognition of, let alone engagement with, individual artists is rare.

One popular metric for measuring artist engagement on Spotify is the ratio of followers to monthly listeners, which ideally should fall between 15% and 20% by music-industry standards. Lo-fi hip-hop doesn’t even come close. For instance, Moods, a producer who has released music independently and through Chillhop Records, has 1.3 million monthly listeners on Spotify but only around 29,000 followers — a conversion rate of 2.2%. Similarly, Brenky, a producer who released nine lo-fi hip-hop albums over the last three years, has 1.2 million monthly listeners but only around 4,000 followers — a conversion rate of just 0.3%.

In other words, such producers are getting massive reach, but close to zero follow-up from fans. As Luke Pritchard, co-founder of College Music, tells me: “If you take a traditional hip-hop artist and a lo-fi artist who both have tens of millions of streams, the former could maybe sell out a tour, but the latter would likely struggle to sell 10 tickets.”

In this landscape — where songs are interchangeable, indistinguishable commodities, and artists are unrecognizable to the average ear — it’s arguably larger content aggregators and curators, not artists, who are at the top of the food chain. And now several companies, some with venture-capital funding behind them, are racing to claim their own share of the lo-fi aggregation market.

For instance, music distributor Amuse now sponsors several lo-fi hip-hop playlists that prioritize artists who use the company’s distribution tools. One of the most commonly-playlisted lo-fi hip-hop labels on Spotify is Epidemic Sound — a Swedish production-music company that is notorious for buying out all of the rights to its artists’ works, and refusing to sign artists who are affiliated with performing rights organizations (PROs) like ASCAP and BMI. The relatively new lo-fi label Strange Fruits is playing the volume game, having released over 1,500 tracks within just two years — but sources tell me their deals are also exploitative, allocating only 30% of revenue to artists (versus the standard 50/50 split in the lo-fi ecosystem).

Several veteran lo-fi labels and curators are actively working to circumvent this commoditization and work to make sure that they, as well as the artists they sign, can still lead sustainable careers. Some are developing more visual-centric sub-brands (e.g. lo-fi label Dust Collectors’ new Instagram-friendly “visual label” Visualizer). Others are selling vinyl LPs — an intriguing twist for a genre that’s so heavily online; Chillhop, College Music and United Common Records have all hosted successful vinyl-crowdfunding campaigns on the platform Qrates, collectively selling thousands of records.

Chillhop even has plans to open its own lo-fi hip-hop cafe this year, with an accompanying podcast. “We want to tell deeper storylines, and to showcase a culture and a lifestyle,” says van Leeuwen. “I want to make sure we’re not building a company where everyone’s full-time income is based off of the ability to get onto editorial playlists on Spotify.”