And where does that analysis leave VEVO? “I said it was a huge mistake back then, and I still think it’s a huge mistake,” Cuban told CBS.com in an interview aired last week. “Because on one hand, you say, ‘Wow, YouTube has got all these people that come to their site.’ But think about what’s really going on at YouTube. All YouTube is, is Google subsidizing the bandwidth of every individual in the world.”
In other words, a fantastic, game-changing site that never quite fixed the monetization problem. Because for every moneymaking YouTube creator, there are millions of baby videos and pet tricks with limited audiences – and limited monetization potential. “You name 100 people who are doing well and then there are nine zillion who suck,” Cuban continued. “I don’t think YouTube has really accomplished anything.”
Which sounds just like the situation in music. Look no further than Rebecca Black, who has one of the largest videos in YouTube history. But a financial analysis showed surprisingly-low revenues on those views – even after hitting the astounding 100 million mark.
Which, by default, leaves almost every other artist video with modest returns. And that includes the major labels, who signed revenue-sharing deals that legitimized the experience but aren’t exactly tipping the scales (and don’t even get started on publishing payouts). Meanwhile, we’ve heard that YouTube is approaching stand-alone profitability, though we’ve also heard tales of losses approaching $500 million in previous years.
Enter VEVO, where the grandiose challenge is to attract high enough CPMs to make it all worthwhile. VEVO executives keep pointing Digital Music News to CPMs somewhere in the $20-range. Sounds like a growth story, though many executives are still watching this story with skepticism. As in, can these CPMs ever ramp to something comfortably profitable?
Here’s the vid (YouTube comment at 6:35…)