Article Title: Google
Intro: Dumbest deal of the year? VEVO to shun non-Facebook users
Lately, there have been rumblings that VEVO was looking to ditch its biggest technology partner, Google's YouTube, and form an alliance with Google rival Facebook. And now there's reason to believe the rumors might be true.
While a break-up with YouTube could have been written off as being too risky given the amount of traffic YouTube delivers to VEVO, the email seems to indicate that such a break-up is imminent.
Given the music industry's track record of poor strategy and execution over the past decade, the structure of the apparently impending VEVO-Facebook marriage isn't all that surprising, even if it is still disappointing.
Intro: More early criticism
Vevo, in its current form, is doomed to fail.
It’s not even the ownership that’s bugging me, even though there is much to be bugged by. Vevo is jointly owned by Sony Music and the Universal Music Group, with an investment coming from the Abu Dhabi Media Group. This isn’t the first time Sony and Universal have tried to cook up something together; they formed an online music joint venture called Pressplay back in the heydays of Napster.
Nor is it the fact that Vevo.com has been struggling for the better part of yesterday and today, serving up 503 error messages and at times even going completely blank, that leads me to believe it will fail. Even though that’s pretty embarrassing for a site backed by two major labels and sitting atop Google’s infrastructure.
No, what really bothers me is the fact that Hulu for music videos is a fundamentally misguided idea, one that ignores key differences between music and TV programming. TV is for the most part still a lean-back medium.
Of course, there’s already a site that offers music videos, fan remixes and participation that goes far beyond leaving a comment or rating a video: YouTube. Trying to build a separate location for content that’s such an integral part of YouTube without tapping into its user-generated content — that’s a recipe for failure.
Intro: Hulu for the music industry
The music industry finally got its version of Hulu on Tuesday night. Or, to be more accurate, sometime this morning, as the much-hyped launch of Vevo was intermittent and slow going until early this afternoon.
But YouTube, while being a virtual free bazaar of music-related material, is also loaded with dead ends, fake clips, misdirects and plenty of poorly shot videos.
In a quick summary, Vevo offers on-demand streaming of music content with advertisements. YouTube offers the same, without the ads, and more content.
Right now, while the site has a clean interface and all your major label favorites, it seems to have its foot firmly planted in the so-called old model, which would be ad-supported streaming. For the casual user -- and that's pretty much everyone who uses YouTube, really -- Vevo could prove something of an annoyance. Though not every video features an ad, plenty do, and load times, at least at launch, are far from the expedience of YouTube.
Intro: Vevo already on route to the "digital scrapheap"?
I visited the site on Wednesday and I quite honestly can't figure out who or what it's for. It's got music videos, but only from three of the four majors and some independent distributors, which leaves huge swaths of the entertainment landscape blank.
The aforementioned artists are all over the place on YouTube--a site that everybody knows and loves and is largely free from video advertisements. And because Google is behind both sites, videos licensed for Vevo will also appear on YouTube, with Vevo getting the credit (and ad bucks) when a YouTube viewer watches a Vevo video. So why would anybody go to Vevo? Why bother building it, instead of just making it a new channel on YouTube? Who is this for?
If you don't like the Internet, you're not going to be able to create an Internet service that people like. More than 15 years into this Interwebs thing, some people still don't understand that if they create an experience that users don't like, it won't get used. It's like they're still living back in 1973 when we only had three TV networks and one or two daily papers and a handful of local radio stations. We now have unlimited choice. Offer me something better than what's out there now, or please, save yourself some money and effort and get out of my way.
Vevo could certainly turn itself around, but its launch doesn't look very promising. I suspect it'll end up like every other entertainment industry effort that offers no clear benefit to users: on the digital scrapheap.
Intro: The big companies converge
EMI's videos on Vevo will join content from Universal Music Group, which holds the largest stake in the new venture. Sony Music Entertainment is also an equity partner along with Abu Dhabi Media Co., an arm of the Abu Dhabi government.
Faced with declining sales of compact discs, recording companies are experimenting with new ways of distributing their music online through ventures such as Vevo. It will show videos for free, supported by ads.
YouTube will receive a fee for providing Vevo with technology, but will not share in advertising revenue.
Vevo has hired its own ad sales team and is led by CEO Rio Caraeff, a Universal digital strategy executive. About 20 advertisers have signed on, including McDonald's Corp., MasterCard Inc., Unilever PLC and Nissan Motor Co.'s Infiniti brand of luxury cars.
The Vevo Web site and player will also have links to allow viewers to buy songs from Amazon.com or Apple Inc.'s iTunes. Links to artist merchandise will point to Bravado, Universal's online retailing company.
Intro: A high gloss silo?
On Tuesday, video start-up Vevo is scheduled to launch. Supported by three of the top four largest record companies (sources say EMI has agreed to provide content to the site) and backed by the technological muscle of YouTube, Vevo is a Web site that will feature videos from many of the world's biggest recording stars, including U2, Cold Play, the Black Eyed Peas, Lady Gaga, Avril Lavigne, Bruce Springsteen, and Pearl Jam, according to the site's backers.
Much of the music industry, including a score of independent labels that have recently signed on to the project, think it's time for music videos to take the next step in their evolution. They want a standalone site packed with high-definition clips from marquee acts.
Don't look for any user-generated content on Vevo, according to Doug Morris, chairman and CEO of Universal Music Group, the man who came up with the idea for the service. He said he wants to offer music fans as well as advertisers a more polished digital stage. That's one of the main reasons the venture was built, to charge advertisers premium rates in exchange for premium content.
"What we're really doing is taking back control of everything," said Morris, who operates the largest of the top four recording companies. "This is us taking control of our future...Vevo enables us to provide consumers with about 80 percent of all the music videos in the world. So, this is really like MTV on steroids. We're starting with that kind of audience. But now we're in control of it. We don't have to go through a middleman anymore."
Intro: The gold plated YouTube?
New York-based Vevo is a partnership between Universal Music Group and Sony Music Entertainment. EMI Group is close to taking a stake as well, according to Bloomberg News . Google's (GOOG) YouTube is also a partner. Abu Dhabi Media is an investor. The service, from which the partners will share advertising revenues, will make its debut with 15,000 videos.
Vevo's goal is to become a central hub for videos of a premium quality "that enhance the music experience for fans," says Rio Caraeff, Vevo's CEO and a former top digital executive at Universal. Video streams of Sony and Universal artists alone top a billion hits a month on YouTube, adds Caraeff. All of that traffic will shift to Vevo.
That track record may be one reason why Warner Music Group (WMG) has so far balked at joining Vevo. Another may be that CEO Edgar Bronfman Jr. believes Vevo's portal-like approach takes away from the only brands that matter in music: the artists. That's why any video that Warner syndicates to other Web sites drives fans to the artists' own sites. This makes business sense for Warner because half its talent roster is now signed to so-called 360 deals in which Warner owns a greater share of the artists' rights. Warner stands to gain from any concert tickets or merchandise sold on these artists' Web sites.
One advantage the Vevo model will offer, however, is that it can draw large audiences on a scale attractive to top-brand advertisers, says Vevo CEO Caraeff. Even before the launch, 20 advertisers have signed on, including AT&T (T), say Caraeff. Vevo also aims to give advertisers the opportunity to partake in interactive features with fans, such as creating branded playlists with fans. And by offering a separate channel on YouTube—with its own dedicated advertising sales staff—Vevo can offer a safe environment to lure advertisers that might be skittish about YouTube's racier material, Caraeff says.
Intro: The plan for world domination
On the eve of Tuesday's launch of online music video service Vevo, company CEO Rio Caraeff sat with Billboard to discuss the year-long effort behind the creation of the initiative, his vision for the service's immediate future, how he plans to make it the No. 1 music service in North America.
As I project forward beyond that, I could say we're focused we're on building out our sales force and getting to 35 people for North America, I could also say my head is on how to make the product better and investing in an around the video itself.
How would you say Vevo's strategy differs from WMG's YouTube partnership strategy?
I don't think Warner's approach is wrong. I just think their priorities are different than Vevo's priorities. I think this business works at scale, with meaningful amounts of revenue, when you have the power of aggregation; when you have the ability to have everything all in one place and that aggregation is massively distributed. A very large percentage of the ad dollars go to a very small amount of companies. If you're not one of those companies you're not going to qualify for the big national campaigns and the big-dollar partnerships. Our objective is to be one of the top 20 sites in the world. Our objective is to be the No. 1 music service in North America. Our objective is to drive over 500 million streams per month [and] reach 40-50 million people a month.
I think Warner's strategy is to drive people to their artists' Web sites, where they can then maximize their 360 deals. There's nothing wrong with that; it's just a different approach from what we're focused on.
What's the pitch to advertisers here?
We're offering access to the passion of the fan and the connection between the fan and the artist. It's that experience that is hard for them to get elsewhere at significant scale. So it's combination of two things. One is media, which is a combination of display, limited preroll, overlays. And then there's custom integration into new programming, into our playlisting tools and lyrics features, into new shows and new concepts not available elsewhere.
Vevo, the online music video service that turns 2 this month, has paid out more than $100 million in royalties since December 2009 to songwriters, recording artists, record labels and other music copyright holders.
Vevo's visitors are also more engaged, each playing nearly 15 videos on average in November compared with fewer than 10 videos in January. They're also spending more time with the service — more than an hour on average per viewer, playing not just music videos but also original shows produced by Vevo, up from little more than half an hour two years ago.
Intro: Now ripping off Indies as well as mainstream!
Today, Universal Music Group (part-owner of VEVO) announced that they will begin paying independent publishers for the use of their compositions streamed on VEVO, representing a huge win for independents.
While no specifics of the deal have been disclosed, it has been said that publishers stand to receive 15% of advertising revenues generated by music videos and that the deal takes effect back to 2008. However, for the first two years through 2009, the agreed upon rate is 10% of revenue, while the 15% revenue rate kicks in for music videos in 2010.
Before this announcement, monies were paid by VEVO and kept by UMG, while indie publishers were basically getting left out. This agreement (which covers North America) has been coined by the NMPA as a “groundbreaking model licensing deal” due to the fact that it will allow songwriters and music publishers to a share in revenue from music videos.
Intro: Vevo led the top five partners in total streams
May 2012 marks the first month that Nielsen is publicly reported streaming measurement on thousands of YouTube partners. The top five YouTube Partner channels, led by Vevo, Warner Music Group and Machinima, combined for nearly 1.5 billion total streams. YouTube provides content creators with tools and programs to improve their skills, build their audiences, and monetize their videos.
To put this into context, YouTube continues to be the top online video destination in the U.S. with over 136 million unique viewers who streamed 16 billion videos during May 2012.
More than half of each channel’s unique viewers were under the age of 35.
About 1 in 6 Americans who watched online video during May 2012 streamed video on the WMG YouTube channel (almost 23 million unique viewers).
Vevo led the top five partners in total streams (695 million), while Machinima averaged the most streams per viewer, 24 in May 2012.
Machinima also captured the highest composition of male viewers (62.6%), while others hovered closer to a 50/50 female/male split.
Fullscreen and Vevo skewed toward a slightly older demographic, as 15.3 and 15.7 percent of their viewers are 50 years or older, respectively.
Maker drew 9.7 million unique viewers who averaged nearly ten streams per viewer.