In the name of revenue, music-video site is born
By Dawn C. Chmielewski | Tribune Newspapers
April 11, 2009

U2 lead singer Bono, well known for his One campaign to end poverty, has turned his focus to a charity case closer to home: the ailing music industry.

The rocker is credited with bringing together Universal Music Group and Google Inc.'s online video site, YouTube, urging talks that this week resulted in a partnership to launch a new music-video service featuring professionally produced content from the label's big-name acts.

YouTube will create a dedicated channel on its site, to be called Vevo, where users can watch music videos from Taylor Swift, Kanye West, Weezer and other artists signed to the world's biggest music company.

Later this year, Universal and YouTube will debut a separate online music-video site, Vevo.com, where viewers can watch music videos from Universal's library. YouTube will provide the underlying technology, Universal will furnish the content and the partners will split the advertising revenue.

"We have been searching for a way to work with the rights holders which really does drive more—let's be blunt—more revenue," said Google Chief Executive Eric Schmidt.

Music videos have posed a vexing dilemma for YouTube. These short-form videos are among the most watched clips on the site, with a hot new track from an artist like Soulja Boy attracting millions of views.

But the advertising revenue has not been enough to make YouTube's partnerships with the labels profitable, even though it monetizes hundreds of millions of views a day. Indeed, Warner Music Group said it pulled its music videos off YouTube in December 2008 in a licensing dispute over the value of its content.

Universal Music Chairman and Chief Executive Doug Morris proposed an approach modeled on the success of the News Corp. and NBC Universal joint venture, Hulu, an online video site that, in a little more than a year, is now attracting 34 million monthly viewers with the lure of Hollywood movies and episodes of popular TV shows.

Morris outlined a similar concept for music videos, in which YouTube, in partnership with Universal, would bring together all the professionally produced content into the online equivalent of MTV. The venture would redistribute the music videos online in a bid to grab an audience, which hopefully would be large enough to attract advertisers.

Morris said he is speaking with other major labels about participating in Vevo.

Bono played the role of "digital ambassador," prodding his label, Universal and YouTube to explore a partnership.

Record labels are eager to explore ancillary revenue to help offset free-falling CD sales. This year's album sales are down 45 percent from 2000, according to Nielsen SoundScan.

souce: sun-sentinel