Resnikoff’s Parting Shot: The Vevo Challenge

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Doug Morris was the first to rattle the cage on the YouTube ‘relationship,’ if it could be called that several years ago.

After all, why was YouTube (and MySpace, Yahoo, and everyone else) getting major label content for free?  Sure, the majors always hated aspects of their relationship with MTV, yet video spins spelled big sales.  MTV was a promotional giant, one that could make-or-break an album, and oftentimes, an artist.

But YouTube?  The promotional equation is far less direct, and music videos are a major draw for the destination.  This was a different balance of power, and the majors ultimately wrestled a piece of the advertising revenues.

But wait… what revenues?  Turns out that CPMs on YouTube are in the gutter.  Advertisers want controlled affiliations and experiences, not accidental affinity with blabbering response videos, idiotic comment threads and grainy recordings.  YouTube is heavy on volume and light on value for brands, and that is trickling down to major label payouts.

So what to do?  Warner Music Group wants to play the old game, yanking videos and knocking things over until they get a better percentage.  But what about the bigger, top-line problem?  Enter UMG digi-architect Rio Caraeff, whose vision on Vevo is to build a country club next to an overcrowded skid row.  Shuttle the videos into a cleaner, higher-end environment, and advertisers will follow with more cash, more often.

And there are a lot of videos to shuttle.  The ‘universalmusicgroup’ channel on YouTube contains 9,315 videos, and at 3.6 billion cumulative views, it is the most-watched channel ever.  The other majors – also being invited into the Vevo tent – have well-stocked, well-watched channels as well.

Yes, music videos mean a lot to YouTube, and other video destinations as well.  Welcome to the new MTV, with completely different rules attached – for content owners, content presenters, content consumers, and most importantly, advertisers presenting alongside the content.

Guess what? YouTube shares the pain of its ever-demanding major label partners.  YouTube wants better CPMs as well, and a better vote from advertisers.  But how can they accomplish that without disrupting the attractive, user-generated cornerstones of their service?  The freedoms of mob rule, and the wide boundaries that come with it?  Now, YouTube is holding hands with Universal to attempt to figure that very question out.

But both parties have a very difficult challenge indeed.  One of the issues centers around control.  After all, if Vevo becomes the higher-end hangout, what happens to all of the user-uploaded content floating on the mainline YouTube?  It would have to be removed or truncated into teaser clips, the former a process that Warner Music Group is struggling through.  Just jump onto YouTube, and a large number of WMG videos are readily available – despite a concerted effort by both parties to remove them.

And what about the user experience?  Search for 50 Cent… and then get gently nudged to Vevo, a higher-end environment?  And once on Vevo, suddenly the rules of engagement change?  No response videos, no gutter responses, none of the bad affinity stuff that scares advertisers away?

YouTube attracted 100 million viewers last month, according to comScore, but how many of those want more rules and YouTube premium appendages?  Can the worlds of professionally-created and user-generated content be separated, and still coexist at the same time?

Anyway, at this stage, the questions abound – but Caraeff and company are undoubtedly still sorting through the details.  Indeed, the challenges are intimidating, but at least Universal has a defined, limited objective to fulfill on this one.  Sounds daunting, but compared to the large number of ill-defined, amorphous initiatives that majors often embrace, the executives pondering Vevo should consider themselves lucky.

Paul Resnikoff, Publisher