Friday, April 10, 2009

Universal Music / YouTube Deal Could Help Save the Music Industry

Wired magazine reported this week that Google’s YouTube and the Universal Music Group confirmed the launch of their music video collaboration,, for later this year. Think of it as a Hulu for music videos (which, it appears, was the inspiration for Vevo). Revenues will be shared between YouTube and Universal.

The service will be advertising based and will serve up Universal’s music video assets (including artist interviews and concert footage) that will be of higher quality than the standard YouTube fare that is currently available. In addition, it’s likely that YouTube, and eventually AOL and Yahoo, will also have access to Vevo’s video library. Ultimately, the goal is to add other labels to the service as well.

If it works, Vevo would be a significant win for both parties. For YouTube it would mean the end of Universal’s licensing violation claims. And, as a premium YouTube property, Vevo would likely generate premium fees from advertisers. For Universal it would be a solution to their repeated efforts to monetize their music video business.

Music videos have been licensed to YouTube for several years now. But they have not generated the level of advertising revenues that either YouTube or the music companies had hoped for. This is most likely a result of the motley nature of music videos available on YouTube.

Ultimately, Universal (and the whole music industry for that matter) has nothing to lose by this venture. After years of declining record sales and profits caused by the rise of file-sharing, to say the music business is in dire need of new revenue streams is putting it mildly.

No comments:

Post a Comment