Création et Internet

[stephen at melbpc.org.au]

YouTube and Universal to Create a Hub for Music 
 By Miguel Helft times again Published: April 9, 2009 


SAN FRANCISCO — YouTube, the most popular online video site, and 
Universal Music Group, the world’s largest music company, said on 
Thursday that they would create an online hub for music videos and 
related content, called Vevo. 

The agreement is the latest of many efforts by YouTube, which is owned by 
Google, to put more professionally produced content in front of its huge 
audience, and in turn, earn more money from advertising. 


Music videos of Universal’s artists will be available both on Vevo.com, 
which will be powered by YouTube’s technology, and on a Vevo channel on 
YouTube. The companies said they would share revenue from advertising on 
both sites, but declined to discuss specific terms of the agreement. 

Vevo is being set up as a separate company that is owned by Google and 
Universal, according to a person familiar with the agreement who 
requested anonymity because he was not allowed to discuss its terms 
publicly.


Google and Universal said they planned to introduce Vevo this year. They 
said they were working to persuade other major labels to join the site. 


Industry executives and analysts said the partnership appeared to be an 
effort to emulate the success of Hulu, an online joint venture between 
NBC and Fox for television shows and movies. While Hulu’s audience is 
much smaller than YouTube’s, the site has been able to attract major 
advertisers who view YouTube’s eclectic collection of video clips with 
some trepidation. 


Music companies were among the first in the media industry to license 
their content to YouTube in 2006, and their videos have been among the 
most popular content on the site. But those clips have not produced the 
revenue that music companies or YouTube had hoped, creating new tension 
between the two sides.

In an interview, Eric E. Schmidt, Google’s chief executive, said he 
thought that the two sides have finally created a model that would 
address those issues, by combining Universal’s content and YouTube’s 
audience on a site that will be attractive to advertisers. 


“The music industry has been struggling with how to structure these 
things online, in the right way,” Mr. Schmidt said. 

“This is a good model.” 

Mr. Schmidt credited Doug Morris, chief executive of Universal, which is 
owned by Vivendi, with the vision for Vevo. Mr. Schmidt said that the 
conversations between the two executives began at the suggestion of the 
singer Bono.

Mr. Morris said that over the last few years, Universal has gone from 
losing $70 million a year in the production of music videos for 
promotion, to earning roughly that amount now. 

He described Vevo as the “next step” in Universal’s ability to monetize 
music videos. “It is going to be a powerful product,” he said. 

Mr. Morris said that Vevo would include other content from Universal, and 
eventually offer fans the ability to buy merchandise and concert tickets. 

The agreement also renews a license allowing YouTube’s users to include 
Universal’s soundtracks in their videos. If successful, Vevo could 
compete with other online sites for music videos, including MySpace. But 
analysts said it was too early to predict whether music fans would flock 
to the site.

“It takes more than a premium-content destination to really build a 
business,” said Ross Sandler, an analyst with RBC Capital Markets. Mr. 
Sandler said fans could end up choosing to watch music videos on YouTube 
rather than on Vevo.

Mr. Morris said he has been in discussions with the other major labels, 
which include Warner Music Group, EMI and Sony Music, about joining Vevo. 
The labels all said they have indeed been approached, though talks are at 
early stages.

Some of the licensing deals between labels and YouTube have expired 
recently, and negotiations over renewals have dragged on as music 
companies have sought better terms from YouTube. 

In December, Warner Music removed its music videos from YouTube, saying 
it “simply cannot accept terms that fail to appropriately and fairly 
compensate recording artists, songwriters, label and publishers for the 
value they provide.” Similar disputes have erupted in Great Britain and 
Germany.

The agreement represents a victory for YouTube, which needs more 
professional content to lure advertisers to reverse what analysts say are 
huge losses derived from the high cost of running the site. 

Mr. Schmidt said that the agreement could become a blueprint for 
resolving simmering conflicts with other media companies.

“It can serve as a model for the nonmusic areas, which as you know, for 
us have been problematic,” he said. 

Ben Sisario contributed reporting from New York.
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Cheers,
Stephen