FORTUNE -- The "observer effect" is present in media just as it is in physics: The act of observing (or measuring) something always affects the thing being observed. In the case of Billboard adding YouTube videos to its Hot 100 chart of top singles, that means that even more videos like "Harlem Shake" and "Gangnam Style" will be produced based on the hope that they'll go viral. An increasingly desperate recording industry will spend that much more money and attention on such songs/videos, and perhaps that much less on developing acts that might have real staying power and that are hoping to make it over the long haul, based on their musical talent.
Which is not to say that it's wrong for Billboard to add YouTube (GOOG) to the Hot 100. It should have done so years ago, since that's where a lot of people discover new music. Its exclusion from the Hot 100 meant that the chart presented a distorted view of the marketplace. YouTube is responsible for a lot of hits, since music that is found there is then often downloaded, played on the radio, streamed on Spotify or other services, and sometimes even purchased on CD -- and only then is measured by Billboard.
So YouTube was already affecting the Hot 100, only now it will do so directly. The results are already in: The addition of YouTube came just as "Harlem Shake" was hitting viral critical mass, and it debuted at No. 1. If YouTube plays weren't counted in the Hot 100, it would have entered the chart at No. 15, according to Billboard.
"Gangnam Style" would similarly have burned up the Hot 100 if YouTube vids had been counted when it went viral last year. The official "Gangnam Style" video in December became the first to draw more than a billion views on YouTube and now stands at 1.34 billion. Between last week, when its YouTube plays weren't counted in the Hot 100, and this week, when they were, the song climbed from No. 48 to No. 26.
The "observer effect" -- not to be confused with the similar Heisenberg Principle, which holds that when producers actually invest in and create quality television programs, they will draw viewers; OK, not really -- doesn't mean that only inane stuff will get produced. People still want good (or in any case, legitimate) music, and they will continue to watch it on YouTube. The addition of YouTube to the Hot 100 caused Rihanna's "Stay" to jump from No. 57 last week to No. 3. And several successful, talented musical acts have benefitted from YouTube play over the past several years. It has been argued that early YouTube play made Lady Gaga's career.
The Hot 100 is the music industry's holy grail, as it is the broadest measure of success. It incorporates most genres and, now, pretty much all platforms: radio airplay (including Internet radio like Pandora (P)), physical media, downloads, streaming services (like Spotify and Rhapsody), and YouTube. Billboard's charts, which were launched 70 years ago, have always followed listeners to whatever their chosen platforms were, though it usually takes some time to take stock of them. CDs quickly took hold when they were introduced in the '80s, but at first they were considered specialty items for audiophiles, and weren't counted in Billboard's charts. Similarly, YouTube had been a popular platform for music consumption for a few years before Billboard even started planning to count its videos. Talks with YouTube and with Nielsen, which supplies the data, started about two years ago, according to Billboard. Streamed songs were added to the chart about a year ago.
Included are both official videos like those provided by Vevo (which is owned by, Universal Music Group, Sony Music Entertainment (SNE), Abu Dhabi Media Company, and E1 Entertainment) as well as user-generated videos that incorporate "authorized" copies of songs. That's crucial in the case of viral hits like "Harlem Shake," which all kinds of people are using to create their own videos depicting people dancing idiotically.
YouTube's influence on the chart almost guarantees that going viral will in many cases be the prime motivator for what kinds of songs get produced and promoted. The thing about that, of course, is that viral videos are often not promoted at all -- they just catch on, with no help from consultants or focus groups. And given the music industry's long history of clumsy, clueless promotional efforts, its attempts to replicate "Gangnam Style" success are likely to be pretty stupid. But of course, that doesn't mean they won't get watched for just that reason.
The carriers' combined market share shrank to 4.9% last year as Apple solidified its lead
Songs streamed directly to cellphones, once touted as the next big thing in digital music, failed to take off and is now rapidly losing ground to Apple's (AAPL) iTunes Store.
That's the conclusion of a survey in the May 22 issue of Billboard. Based on interviews with distributors representing roughly 90% of the total market, Retail MOREPhilip Elmer-DeWitt - May 19, 2010 11:27 AM ET
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