How can Vevo not be profitable?
That’s what Rio Caraeff said in the "Financial Times". That "We hope to be
profitable in a fairly short number of years."
Let me see… You aggregate already produced videos, which in any event are on
a different balance sheet, you make a deal with YouTube wherein 80-90% of
your content is streamed on that site, and you collect advertising, this is
the holy grail of Vevo, AND YOU’RE STILL NOT MAKING MONEY??
Did you read the "Fast Company" story on Warner Music? Now you’ve got to
read anything in the straight media about the music business with a giant
grain of salt, because these reporters are usually just that, collecting
information, with no underlying understanding of the business they’re
reporting on. But, there are some interesting statistics revealed.
making up 30% of its revenues worldwide and 47% in the United States.
(Sources say that at Atlantic, digital music approaches 60%.) Overall revenue
is steady at more than $3 billion annually and margins are up. In comparison,
Universal Music’s revenue last quarter dropped 13% and digital music sales
Declining Album Sales
In other words, Warner is focusing on the future and Universal, the so-called
behemoth, is living in the dark ages.
Lucian Grainge can’t arrive soon enough. Vevo is the last hurrah of Doug
Morris? If Vevo is a victory lap, bring back Tiffany and Boyz II Men.
Now there are a couple of mainstream reporters who follow the music business
on a regular basis and do get it right. One is Ethan Smith of the "Wall
Street Journal". Today Mr. Smith reports that Warner Music, a Vevo hold-out,
just made a deal with MTV to sell ads for its videos.
Ads With Its Videos"
Let’s start with infrastructure. Vevo has forty ad salespeople and MTV has
150 selling online ads. Furthermore, MTV promised to put Warner videos at
the head of the class, giving them preferential treatment at its outlets.
Sure, the devil is in the details, but it appears that Warner’s the winner
here. Edgar and Lyor’s company has OUTSOURCED the function as opposed to
building in-house infrastructure. Vevo, should be making money now! This
isn’t artist development, sites live and die essentially overnight online.
Something is wrong with Vevo, it’s top-heavy or there’s just not enough money
in online video or…
But it goes deeper. The music industry has been run by Universal, a giant
that controls the new neutered RIAA and bullies its compatriots. And you’ve
got the moribund Sony throwing in, (sure, they got lucky with Susan Boyle,
but beneath the surface, there’s almost nothing there, fire everybody and put
Barry Weiss in charge and give it a go, then again, Weiss is clueless when it
comes to digital) and the supposed forward-thinkers at EMI making a deal too.
And you wonder why the major labels are in trouble. They missed file-
trading, they’re going to end up with a cloud-based track system which brings
in less revenue than a cheap subscription scheme, and they’re still peddling
overpriced CDs and trying to crack down on ISPs.
Finland makes broadband a ‘legal right’
and you’ve got wankers at Universal lobbying to cut off traders’ access.
Tell me how you’re going to win this one? I can’t have Internet access
because the copyright bullies are mad at me! Huh? Let’s see how the Supreme
Court comes down on this. Meanwhile, you’ll never get legislation, or it
will take years, longer than it does for Vevo to be profitable, to enact a
law and meanwhile you’ll have missed the future.
The future is now.
At least Warner realizes this.