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Can Vevo's videos make money for music?

Rory Cellan-Jones | 16:36 UK time, Thursday, 28 April 2011

Have you ever watched a Lady Gaga video? Hundreds of millions have, mostly on YouTube. So who's making any money out of that? To my surprise - and to yours too I suspect - it's a business called Vevo, and it may well be the first example of a successful digital venture from the music industry.

Lady Gaga

The business is jointly owned by two music labels, Universal and Sony, and Abu Dhabi Media, and this week it has been spreading the word about its UK launch. But even while it's been building its business in the United States, Vevo has already been a major force in UK music video distribution - although virtually invisible.
So if you look for just about any artist's videos on YouTube you will find that they've been put online by Vevo, which has licensing deals with all the major music labels. When I met Rio Caraeff, the former Universal executive who started the venture, he explained that the industry had originally licensed its videos to far too many places. "That's good for the consumer, "he said, "but all of those places are selling the same content to advertisers."

Now though, he says, the advertisers have less choice, because the industry, through Vevo, presents a united front.

"Vevo can say to advertisers, only we can present you with 60 million video viewers in the 18-34 demographic. Ubiquity for the fan, scarcity for the advertiser is the best way to maximise the value of the content."

And while he wasn't releasing any numbers, Mr Caraeff said the business was on the path to profitability, and was succeeding in its mission to convince advertisers that music was premium content in the same league as sport or TV drama.

This set me thinking about Spotify, another digital music business which appears to have a less comfortable relationship with the big labels, as we've seen recently. Rio Caraeff said he'd decided that video was a much safer bet than another audio business - and explained that was because he'd studied the psychology of music-label decision-makers:

"If I'd made it an audio business people would have been worried about cannibalisation and the impact on the incumbent business model."

So, for Vevo, he'd managed to negotiate the kind of global and long-lasting licensing deals which are still eluding Spotify.

But can Vevo, created by an industry which has repeatedly failed to embrace the digital era, succeed where other efforts have failed?

"There's a history of failed ventures," admits Rio Caraeff. "Did the music industry create Spotify, did they create YouTube, did they create iTunes or the original Napster? No." But he says all the businesses created by the music industry were based on protecting the legacy business model - whereas Vevo is focussed on what music lovers want.

It is of course also focussed on a free advertising-funded model. What's ironic is that the labels appear content to see Vevo pump out music to millions of YouTube viewers for nothing, while remaining nervous about letting Spotify do the same. Even if Mr Caraeff understands the psychology of the music industry it remains a mystery to me.


  • Comment number 1.

    Vevo is a bit of a Faustian pact. Sure, they license the videos so that their long term future is assured on YouTube, but at such low quality (360p) that they are painful to watch.

    Even my two-year old remarked how her favourite Eliza Doolitle video suddenly looked 'no good' when Vevo stepped in a month or two back and all the 480 & 720 content was removed.

    Also, all the other fan-added content was aggressively pursued and taken down at around the same time, even the stuff that had proper links to iTunes etc., so there was presumably some sort of official sanction prior to Vevo.

    Good for business = bad for consumer? Certainly so in this case. Vevo has all the hallmarks of an old industry mindset. I don't wish it well.

  • Comment number 2.

    Please, please, please, Music Men--embrace Spotify like the Godsend it is. The best £10 I spend every month, and it could be even better. YouTube can be used as a less convenient (and less legal) way to access millions of tracks; why not work with a partner that does the same, legally, with higher bitrate and better UI... and that wants to pay you per play?

  • Comment number 3.

    Vevo is good in the sense that videos are uploaded without watermarks and the problems that unofficial uploads often have, but it still has its problems.

    Firstly, Youtube audio is still not remarkable - Often it's a low bitrate, and as consumer technology improves, this is noticable for some consumers (although admittedly not for a lot of their target market). Also, as another commenter mentioned, their uploads are rarely in HD at this moment in time.

    Ultimately, the challenge Vevo faces is that consumers are so used to not seeing advertisements and wait times online nowadays, that if they're expected to view a 20 or 30 second advertisement before a video loads, they will either seek out a way to circumvent that or just look elsewhere. Forced advertising is increasingly becoming something that I don't believe is tolerated online.

    Also, Youtube isn't really great for pure music listening - Videos have all sorts of interludes and sound effects (take "Telephone" by Lady Gaga - it's a 9 minute or so video for a 4 minute track), and so it can't really compete with Spotify in that respect.

    Overall I would say that the industry is shooting itself in the foot by not embracing an unlimited free Spotify, which is probably the only technology thus far that has taken away from illegal file-sharing and toward legal consumption methods again.

  • Comment number 4.


    I totally agree about the quality of some videos but the thing is all the fan-added content is illegal. It is only allowed as the copyright owners allow adverts to be included and take some money from it. You don't have the right to put the material on YouTube in any form.
    One obvious reason the videos are lower quality is that they want you to go to iTunes and buy the official ones.
    You can just hope that the groups/artists you like do a better job, some of them put up massive HD versions of their work.

  • Comment number 5.


    I wonder if the resolution is dependent on video, artist, and especially label, as I've certainly seen Vevo-uploaded video at higher res. than 360p - many at 480p, and some HD (though my speeds are too low for that).


    The thing about copyright, though, is that it's not a question of (il)legality akin to theft or speeding, where the state pursues offenders independently and regardless of the actions of any injured party. Copyright laws are enforced only when and to the extent that the holder of the rights chooses to do so: some fan-uploaded music videos (and other clips: Monty Python ones are a notable case, where multiple fan uploads coexist with an official channel) have been on YouTube for many years, presumably because whoever owns the rights either doesn't care, or actually sees the presence of videos as a positive for marketing and visibility - not all parties with an interest here take the same view, or the same action. This may be the case especially with older material, where labels and performers are actually glad of the videos, and essentially relying on a fan base to do "long tail" marketing for them.

  • Comment number 6.

    @Gordon My name is Rio Caraeff and I am the CEO of VEVO.

    With regards to your post, I can clarify that we distribute the highest quality video's that we can. Many of our releases are in HD - 1080P & 720P (in addition to lower resolutions more suitable for slower net connections or mobile phone platforms) but other videos we offer only in lower resolutions due to the limitations of the source that we are provided by the artist or content licensor.

    If you like Eliza Doolittle in HD, check out this video we shot of her performing 'Mr Medicine' in Austin, TX recently:



  • Comment number 7.

    I just downloaded the Vevo application on my iPhone this morning and was thinking about how they must have great licenses to be able to provide so many music videos. I am more than happy to sit through some adverts to watch the music videos provided and I hope it all works out for them.

  • Comment number 8.

    @Riozilla Thanks, but it's my 2 year old daughter that likes Eliza Doolittle, not me!

    What got me was that the previous videos on the official Parlophone/EMI channel at up to 720p were replaced by the Vevo 360p only versions.

    Clearly then the videos were available, and it is YouTube, its content caching partners, my ISP and myself that bear the costs of distribution, not Vevo, so why restrict us to low quality versions now?

  • Comment number 9.

    With all the fuss about control and DRM I'm glad the music industry has finally come up with a revenue generating idea that is likely to stick. Focusing on the legacy business model has landed the entire industry in a mess - about time they adopted a fresh view!

  • Comment number 10.

    Having seen a number of the comments on Vevo videos for months, I have noticed that Vevo have reduced the number of videos that have adverts at the start. Personally, I don't mind adverts around the page if I can listen to the music for free. Adverts at the start were a major problem though. Finally, how many people actually use YouTube as a genuine substitute for music? Most of the time, people use it as a means of showing friends a new song they have found by linking it to Facebook or Twitter.

  • Comment number 11.

    Sorry, but what exactly do we need a music industry for nowadays? Why does it deserve protection? Why is so much legislation designed to protect an obsolete business model and criminalise the general public passed through parliament?

    Artists don't need the music industry as it existed in the past any more. The internet has made it obsolete. All you need is some recording equipment and a website and away you go, you can make money from your own music from donations. The music industry only existed to supply the media on which music was recorded. That was fine in the days of LPs, cassettes and CDs, but in the mp3 age, sorry, it just isn't needed, and the music industry needs to be like any good capitalist industry and either re-invent itself or die. I have zero sympathy for it- you've listed all the successful ventures, all of which the industry fought, because they saw "piracy" as a bad thing, rather than a genuine consumer need that was not properly addressed via legal means.

    An example of its continued idiocy is the fact that yet again, it exerts control over what the user wants to watch and see, forcing poorer quality and restricting people. It has been shown time and time again that restriction alienates consumers and turns them to piracy. Wake up! Vevo would have been a step in the right direction if it had been implemented 10 years ago. I might even believe that they were going in the right direction now, but the fact is that the parallel fight with Spotify (which any fool can see that industry should embrace, not fight) just proves that they have not changed, and so I continue to wish them a speedy capitalist destruction.

    The best thing is that even if the music industry dies, the music never will.

  • Comment number 12.

    When i try to watch old school classics like New edition i see "New edition VEVO" (used to wonder what VEVO stood for). I have also tried to watch some videos but can't due to region lock-out. It would be interesting to see how they do

  • Comment number 13.

    Rory, the mind set of most industry insiders - of ALL industries - is often prehistorically fixated on that industry's golden age, i.e., when the industry had it most easy, was most profitable, was most powerful, most acclaimed, etc.. This is why innovators tend to come from outside the industry, or're individuals who've left the 'safety' of corporate hierarchy.

    In the case of the music industry, the golden age concerned was a time when video's emergence was viewed as a device for promoting record sales in the circumstances particular artists were unable to appear in particular countries, on particular shows.

    In short, record labels still tend to view sales of physical units of recorded music alone, i.e., cds, as the intrinsic core of their profitability.

    Videos, and even downloads, they still tend to view as extrinsic - or, at best, tangential - to their purpose for existing.

    It's the reason why the likes of U2 and Madonna now make a priority of pursuing deals not with record companies but promotional companies which look to make enormous profits by going after every conceivable - and yet to be conceived - area with exploitative potential, not the least being such merchandising concerns as branded clothing, hygiene products, static visual products such as posters, concert publications, etc., etc..

  • Comment number 14.

    p.s. It's my strong suspicion record companies see the likes of VEVO as a form of guerilla warfare on the consumer, in that they shut down availability of high quality videos. The idea being, it seems to me, exclusive availability of 'free' far inferior low grade equivalents'll act as advertisements to frustrate consumers into realising what they're missing and incentivise them into shelling out for the 'real' thing.

    I've noticed Sky Sports POSSIBLY doing something similar on 'free' sites showing 'their' soccer match transmissions: they used to try and shut these down, but now they actually advertise themselves on them; and suddenly, by an amazing coincidence, the 'free' matches're now not only even more visually and sonically shoddy, but they're full of identical 'mechanically' inserted signal 'disruptions' of identical length, mechanically repeated at intervals of exactly the same length.

  • Comment number 15.

    If I watch a video and it has a forced advert at the beginning I will invariably shut the video down - if I simply have to watch the video, I will switch to another tab while I am waiting. There is nothing you are advertising that I want. Even the things I want, I don't want them when you force your adverts on me. And that stands for those annoying little pop-up ones as well.
    The record industry makes no sense, Vevo gets licenses and Spotify can't. Or just 10 hours of listening now. I now mainly use mflow to listen to music and also GS. Most artists realise now that it is better to let people listen to your music for free, in the hope that they will come to a concert and maybe buy some merchandise. One concert ticket £50. One t-shirt £30. So £80 for the band as opposed to £10 split 80-20 in the record label's favour from a CD sale.

  • Comment number 16.

    "So if you look for just about any artist's videos on YouTube you will find that they've been put online by Vevo"

    Not so, Rory. The vast amount of content already existed, having been put there by the bands (ok, the record labels) themselves. Vevo, almost overnight, thanks to its cosy relationship with the labels, has simply combined all of that content and re-branded it as Vevo content.

    Vevo isn't some amazing solution. It's the music industry working out for itself how to make as much money as possible - be reducing advertisers choice and reducing consumers choice. It's certainly true that much of the content has been downgraded in terms of quality, it's also been censored to a ridiculous extent.

    Far from improving the online music video scene, Vevo has made it harder to get access to quality music content. Added to this Vevo's piecemeal approach to launching in specific countries and there are huge numbers of users globally who can't access Vevo content.

    All in all, Vevo is bad news. I only hope it improves seeing as there seems to be no other option.

  • Comment number 17.

    Since i moved to Portugal all i can see is: "Sorry! The page you are looking for is not available in your region."
    Thank you (VEVO) morons!

  • Comment number 18.

    Vevo completely ruined Youtube. Between all of the annoying advertisements at the beginning of the video, and all of the "foul" language taken out of the songs. Fortunantly there are still plenty of users who upload music videos that don't have the stupid advertisements on them.

    Personally for me, when I see an adverstisement on a video it makes me hate the product as it tries to distract me from the video that I'm about to watch.

    I also hate the fact that many videos that have been uploaded by a random user say something like "This video containes content that is licensed by Sony Entertainment and is not available" or something like that. It's taking over Youtube :(

  • Comment number 19.

    About the only thing that is a plus for me is that much of the music I listen to is not uploaded by Vevo.

    German deathcore, deathcore, metalcore, metal have so far not been "taken over" by Vevo. Therefore, I do not have to worry about the adverstisements before a song in turn keeping me happy when I'm online and feel like listening to music.

    Although Vevo could do me a favor and not censor all of the language in Everywhere I Go by Hollywood Undead. Because the song is ruined when half the lyrics are missing.

  • Comment number 20.

    Backwards thinking from an industry that is dieing a slow and seemingly painful death. Surely someone, somewhere within the music industry can come up with a viable business plan in the digital age that is good for ALL parties?

    Vevo is NOT the way forward, it's a distraction at best.

  • Comment number 21.

    @SpeelingMistake "All you need is some recording equipment and a website and away you go, you can make money from your own music from donations"

    People aren't willing to pay for music when it is conveniently provided in a single place at less than a £1 a track (iTunes/Amazon etc.) so people aren't going to browse to all the various sites of their favourite artists download a track(s) and then make a reasonable donation - they will donate nothing or a nominal 1p or something.

    The returns for the artist and record companies aren't large enough from services such as Spotify. I can't remember the numbers but Lady Gaga had a ridiculous amount of plays on Spotify and got a puny amount in royalties. You people wouldn't be willing to work for free so you can't expect musicians to either!

    All the people not willing to pay a reasonable amount for music will be the 1st to moan as we see the variation and quality of popular music reduce dramatically. We are already seeing record companies unwilling to take risks on anything which isn't homogeneous pop as they can't take the risk that the handful of people who bother to pay aren't enough to turn a profit.

    I do not think the record industry has got it right but neither do I think it is reasonable to say "we've decided we would like you to carry on making music for us to listen to but not pay for it" , that's called a charity not an industry!

  • Comment number 22.

    @rjparr I beg to differ. An itunes track might cost 79p. The label gets 70%, the artist will be lucky to get 12% of that 70%. That leaves the artist with less than 7p per track sold. Do the same from amazon and it might be 3-4p.
    I'd happily leave that as a donation for an artist, and cut out the record label and digital store provider and all of their shareholders too, and they would be no worse off. It is my view that micropayments are the future for digital media. Interestingly enough, one of the founders of The Pirate Bay are now working on such technologies- how evil of them! Pennies from an enormous amount of people still equals an enormous amount of money.

    Artists have never made huge amounts of money through track sales anyway- tours provide most of their income, and the best way to get tours to sell out is to make your music heard- if that means giving it away then so be it.

    The variation and quality of "popular" music is at an all time low in my opinion anyway. The talent of the artists haven't changed, its just the music industry trying in vain to justify itself and producing worse results than ever before. Its an obsolete business model, and regardless of how they bleat and moan about how they're not making the record profits they once were, it doesn't change the fact that they're obsolete. If they wish to survive, do it like every other industry has to, and innovate.

    Making money from your work in the arts is not a right, it's a skill, and I wish the best of luck to anyone wanting to try it.


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