“Harlem Shake” Is Bigger Than You Think: Google Inc (GOOG)

The top song in Billboard‘s Hot 100 this week is Baauer’s “Harlem Shake” and it wouldn’t be there without YouTube.

It’s rare to see a track debut at the top of the music industry’s popularity list. “Harlem Shake” wasn’t even on the Hot 100 a week earlier. It wasn’t even a well-known song among fans of electronic music three weeks ago, but that’s when an Internet meme went viral on Google Inc (NASDAQ:GOOG)‘s video-sharing website.

YouTube’s Filthy Frank and The Sunny Coast Skate kicked off the craze three weeks ago with a clip of spastic dancing to the first 30 seconds of the sample-laden hip-hop track. It caught on — quickly. Thousands of imitations were uploaded in the first week alone. As of this morning, more than 92,000 videos of friends, companies, and schools doing the “Harlem Shake” have been uploaded to YouTube. Nearly two thirds of those have been uploaded in the past week alone.

A few years ago this would’ve been a disaster. Tens of thousands of people — including some of YouTube’s most prolific content creators — trampling YouTube’s requests for users not to upload copyrighted music would’ve amounted to a mutinous threat.

This time it’s an opportunity.

“We’ve, from the beginning, been very much a proponent of allowing everybody to do whatever they want with our stuff, as long we’re able to monetize it,” Baauer’s label manager Jasper Goggins tells Time this morning. “It’s a great way to help spread the music.”

Monetization is the key. Mad Decent — Baauer’s label — is able to profit from the craze through Google Inc (NASDAQ:GOOG)’s Content ID algorithm than can slap ads on the claimed clips. Google Inc (NASDAQ:GOOG) and the artist share the resulting revenue.

The publicity is also helping outright sales. Just as viral spoof videos helped propel Carly Rae Jepsen’s “Call Me Maybe” last year, Baauer and its label are benefiting from the publicity.

A whopping 262,000 downloads of the song were purchased last week, according to The New York Times. Pair that up with 103 million views on YouTube across the tens of thousands of “Harlem Shake” videos and the song hit No. 1 with a bullet on the weekly Billboard chart.

It’s a case of perfect timing. A decade ago, Billboard relied on record sales and radio station playlists to sort out its weekly Hot 100 missive. It just started incorporating YouTube views, just in time to wake up the stodgy music industry with this week’s surprising top entry.

For investors, this is another reason to steer clear of the prerecorded music industry. It doesn’t take major label representation to get noticed as recording stars are birthed on reality show competitions and now viral videos.

Thankfully, the record companies are making it easy for investors to avoid them. Warner Music Group was taken private two summers ago. EMI was acquired by Universal Music in 2011, which itself is owned by France’s Vivendi. Sony Corporation (ADR) (NYSE:SNE) is the only other major label, but music makes up a small part of the businesses of Vivendi and Sony.