November 2009

Rio Caraeff isn't just preparing to introduce a new company on Dec. 8 when he launches Vevo, a long-awaited online music video service backed by Vivendi's Universal Music and Sony Music.

His effort to build a business around one of the Internet's most popular video genres represents a new focus for the beleaguered music industry – one in which advertisers are more important than retailers.

"In the past, the music business was about selling music," says Caraeff, CEO of the joint venture. "In the future, the music business is about offering great experiences to everybody who loves music. ... It's not a one-size-fits-all proposition anymore."

Other music companies seem to agree.

EMI, which is considering joining the Vevo partnership, last week became the first major music company to offer videos on Hulu. The ad-supported site, best-known for TV shows, will start by creating a channel for singer Norah Jones that includes her videos and concert performances.

Last month, Warner Music formed a partnership with Web ad sales firm Outrigger Media. It's drawing sponsors to musicians' official sites, as well as other destinations that feature their videos.

It's easy to see why music companies want to try something new. Only about $6.9 billion will be spent this year on music including CDs, online and mobile downloads, and ad sales, private-equity firm Veronis Suhler Stevenson estimates. That's down 45.7% from 2004.

Yet Web surfers love music videos, which account for 55% of the viral videos that attract 100 million or more views, according to audience research firm Visible Measures.

"Some music videos get (played) 50 million times-plus on YouTube," says Ronn Werre, EMI's president of music services. That makes them "a pretty viable format" for a new business.

Advertisers also have their checkbooks out for online videos: Companies will spend about $1 billion in the U.S. this year for ads in or around Web videos, says Caraeff, who adds, "We think it will continue to double each year to about $3 billion or $4 billion in 2012 or 2013."

But because music accounts for just 5% of that online video ad market, the music giants have a long way to go to turn ad-supported videos into big moneymakers. Caraeff says Universal and Sony collectively spend about $100 million a year on the productions. "We have to reform and recondition the entire marketplace," he says.

Regaining control

Step 1 is to regain control of the videos. They're doing that by ending the practice of distributing them to just about anybody who'd pay a licensing fee, including sites that advertisers consider unacceptably vulgar or cluttered with distractions.

"Music videos haven't been treated as high-quality content," says Outrigger Media CEO Mike Henry. "Now that's changed" as companies stop licensing them to ad-unfriendly sites.

Vevo's videos will appear on its own site and a destination on YouTube. They'll also be widely available, including on the performers' own sites, as long as they run in a Vevo-provided player that carries its ads. "The fan has more choice than ever before, but the advertiser has less choice," Caraeff says. "Now they can only buy this audience (for Universal and Sony videos) from one place."

Companies also have to fight advertiser suspicion that online audiences ignore the ads and listen to music while they do other things, such as exchange e-mails or play games. That perception appears to have hurt some ad-supported audio sites this year: Ruckus and SpiralFrog went out of business while investors accepted fire-sale prices when they sold iLike and Imeem to MySpace.

Caraeff says Vevo will grab people's attention by displaying lyrics, allowing fans to chat with each other and offering picture quality that will often approach HDTV. The site also will feature concerts, interviews and TV-like programs, including many that integrate a sponsor's brand or products.

EMI has a similar plan for its Jones channel on Hulu. "It's a way for the consumer to interact with Norah Jones, to see who she is," Werre says. "There's a full-range concert video. And we have the opportunity to put a lot more visual content up there as we go forward."

There's debate, though, over where to focus audience attention. Warner and Outrigger want people to visit the sites of performers, or other fans, instead of a corporate destination. In addition to being the best way to promote the star, it opens options for ad sales, the companies say. The record company can sell spots on multiple sites that appeal to the consumers that an advertiser wants to reach.

"Most music companies have an enormous amount of marketing information about all of their artists and the audiences that they attract," says Henry. Although this approach is "a little more complicated, in the long run it's going to pay off both for the artist and the brand," he says.

But Caraeff says performers, companies, consumers and advertisers will be better served by Vevo's more centralized approach.

"We're trying to restore the premium luster around music," he says. "And we're trying to show brands that music builds a crowd and draws an audience like it has for thousands of years."



http://www.usatoday.com/t...7_ST_N.htm

reading this makes me think of Prince and it is no wonder he just does not care at this point