About 400 million people each month watch music videos presented
by Vevo LLC, the digital-ad-sales platform founded seven years ago
by the world's two biggest record companies.
Yet most people "don't even know the Vevo brand," said Vevo's
new chief executive Erik Huggers. That's despite years of
aggressive branding such as obscuring artists' faces behind neon
color filters and giant Vevo logos in marketing materials.
Vevo aims to change all that as it rolls out a sleek new app
this week and an ad-free subscription service in coming months to
deliver the 200,000 music videos owned by Vivendi SA's Universal
Music Group and Sony Corp.'s Sony Music Entertainment.
Videos and artists are represented on the new app by 15-second
looping video clips instead of static images, and are curated by a
team of expert "hosts" that users can follow for personalized
recommendations. The goal is to draw music-video seekers straight
to Vevo instead of other sites, while turning Vevo into a cool,
artist-focused lifestyle brand that young fans might sport on their
T-shirts, Mr. Huggers said.
Vevo already has its own app, but currently most fans watch
Vevo's official music videos on Alphabet Inc.'s YouTube. Alphabet
owns a minority stake in Vevo and takes a significant cut of the
advertising revenue Vevo generates on the free YouTube site.
YouTube has more than 1 billion monthly users, and music is
among its biggest draws. But after watching music videos on
YouTube, fans typically take to social media and other outlets for
discussion. Vevo is hoping it can bring viewers to its app first
and keep them there by cultivating conversation, connecting users
with artists, tastemakers and like-minded fans and curating chatter
about the videos.
Vevo will continue to sell advertising but will launch an
ad-free viewing option in coming months, a tier that it will likely
price below $10 a month to lure what Mr. Huggers hopes will be
"millions and millions" of subscribers.
Vevo's 200,000-video catalog is tiny compared with similarly
priced music streaming services such as Spotify AB and Apple Inc.'s
Apple Music, which offer tens of millions of songs for about $10 a
month to 45 million paying subscribers combined.
But Vevo said it is the only service besides YouTube with as
many music videos. Spotify's video offerings consist mostly of live
performances, original series and clips from news, talk and comedy
shows on TV; Apple Music and Tidal have paid to offer exclusive
access to some official music videos before their official release
on Vevo, while Apple Music also offers a significant number of
other music videos, many of which are available for purchase at the
iTunes Store.
Music videos are a relatively new revenue source for the music
industry, which began churning them out in the 1980s primarily as
promotional tools to sell albums. Record labels and artists didn't
reap any royalties when their videos aired on Viacom Inc.'s
MTV.
But as record sales declined through the last decade while the
online advertising market blossomed, record labels decided to try
to cash in on their videos. Sony and Universal launched Vevo in
late 2009 to sell the digital advertising, while Access Industries'
Warner Music Group licensed its music videos to MTV. Advertisers
pay a significant premium to reach fans of particulars artists and
genres online through official music videos, though labels are
earning increasingly less per play from the vast sea of
user-uploaded videos on YouTube that feature their music.
In 2010, Vevo generated tens of millions of dollars combined for
its record-label owners, and now generates hundreds of millions a
year, with sales up 20% last year, people familiar with the matter
said. They are modest sums for the $15 billion global recorded
music industry, but Mr. Huggers—who took the helm last year after
stints at Microsoft Corp., Intel Corp. and the British Broadcasting
Corp.—believes he can grow the pie.
To do it, the 43-year-old Dutchman said he "started from
scratch," doing away with TV-like programming that Vevo had rolled
out in 2013, toning down the loud corporate branding and rebuilding
the company's technology.
From Vevo's San Francisco headquarters—in the same building that
houses ride-share firm Uber Technologies Inc.—Mr. Huggers said he's
been competing fiercely for engineering talent with his corporate
neighbors, attracting some musically inclined techies with perks
such as concert tickets, artist visits, satellite offices in
Portland, Ore., and a slew of colleagues that play music in their
spare time.
On a recent afternoon Miguel Alvarado, a DJ and Vevo's vice
president of data analytics, said he was planning to start
analyzing the visual aspects of Vevo's videos so that users could
search and sort them by colors, moods and themes, tracking all the
videos set on tropical beaches, for example.
Chris Wang, a guitar-playing designer from China, showed off a
playlist that users could scan by swiping through vertically
viewable clips of the videos.
In months ahead, Vevo plans to let users comment during any
point in a video, sharing their time-stamped notes on their own
profile pages while highlighting the most enlightening or popular
comments on one official annotated version for all users to
see.
"There's so much value that can be created around the comments,"
said Mark Hall, Vevo's vice president of product, adding that as a
user, "I want to do something that other people can see and is
cool, and shows that I am knowledgeable and interesting."
Write to Hannah Karp at hannah.karp@wsj.com
(END) Dow Jones Newswires
July 14, 2016 17:25 ET (21:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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