GreenBkk.com Tech | Can Vevo's videos make money for music?

Can Vevo's videos make money for music?

Rory Cellan-Jones | 16:36 UK time, Thursday, 28 April 2011

Have you ever watched a Lady Gaga video? Hundreds of millions have, mostly on YouTube. So who's making any money out of that? To my surprise - and to yours too I suspect - it's a business called Vevo, and it may well be the first example of a successful digital venture from the music industry.

The business is jointly owned by two music labels, Universal and Sony, and Abu Dhabi Media, and this week it has been spreading the word about its UK launch. But even while it's been building its business in the United States, Vevo has already been a major force in UK music video distribution - although virtually invisible.

So if you look for just about any artist's videos on YouTube you will find that they've been put online by Vevo, which has licensing deals with all the major music labels. When I met Rio Caraeff, the former Universal executive who started the venture, he explained that the industry had originally licensed its videos to far too many places. "That's good for the consumer, "he said, "but all of those places are selling the same content to advertisers."

Now though, he says, the advertisers have less choice, because the industry, through Vevo, presents a united front.

"Vevo can say to advertisers, only we can present you with 60 million video viewers in the 18-34 demographic. Ubiquity for the fan, scarcity for the advertiser is the best way to maximise the value of the content."

And while he wasn't releasing any numbers, Mr Caraeff said the business was on the path to profitability, and was succeeding in its mission to convince advertisers that music was premium content in the same league as sport or TV drama.

This set me thinking about Spotify, another digital music business which appears to have a less comfortable relationship with the big labels, as we've seen recently. Rio Caraeff said he'd decided that video was a much safer bet than another audio business - and explained that was because he'd studied the psychology of music-label decision-makers:

"If I'd made it an audio business people would have been worried about cannibalisation and the impact on the incumbent business model."

So, for Vevo, he'd managed to negotiate the kind of global and long-lasting licensing deals which are still eluding Spotify.

But can Vevo, created by an industry which has repeatedly failed to embrace the digital era, succeed where other efforts have failed?

"There's a history of failed ventures," admits Rio Caraeff. "Did the music industry create Spotify, did they create YouTube, did they create iTunes or the original Napster? No." But he says all the businesses created by the music industry were based on protecting the legacy business model - whereas Vevo is focussed on what music lovers want.

It is of course also focussed on a free advertising-funded model. What's ironic is that the labels appear content to see Vevo pump out music to millions of YouTube viewers for nothing, while remaining nervous about letting Spotify do the same. Even if Mr Caraeff understands the psychology of the music industry it remains a mystery to me.

Credit: BBC (www.bbc.co.uk)