The world’s biggest video site is also the world’s biggest music video site. Now it wants to start making more money from those clips.
YouTube is using a new deal with Vevo, the music labels’ video venture, to boost ad sales
Good for YouTube and for the music labels. What about for Vevo?
Peter Kafka covered media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.
Google’s YouTube has a new deal with Vevo, the music video venture owned by two of the world’s biggest music labels, that lets YouTube sell Vevo’s clips directly to advertisers. Previously, Vevo’s own sales force had first dibs on the videos, relegating Google to automated, remnant ad sales.
The deal is part of a licensing agreement Vevo and YouTube reached late last year but never announced. But last week, during YouTube’s “Brandcast” pitch to advertisers, the video site tacitly acknowledged the deal when it told advertisers it was now selling Vevo clips as part of its “Google Preferred” tier, where YouTube puts its most valuable and (theoretically) most “brand-safe” content.
YouTube’s pitch to brands at its event last week, delivered by chief business officer Robert Kyncl: “This gives you the unprecedented opportunity to advertise against virtually all music in the world.”
And in case advertisers didn’t pick up on that, the video site hammered it home throughout the show, with multiple performances from music acts, including a three-song, 10-minute mini-concert from Ariana Grande.
The move makes plenty of sense. Google’s team of 15,000 sellers will get their hands on valuable inventory, which should theoretically generate higher ad sales for the music videos. And since Google and Vevo split the ad revenue for music video sales no matter who makes the sale, there should be upside for both Google and Vevo’s music label owners.
People who can’t be happy about the deal but won’t say on the record: Vevo’s sales force, which now has to compete with the biggest ad seller on the planet, as well as those who were hoping Vevo could eventually become a valuable, standalone asset instead of one dependent on Google for views and ad dollars.
Vevo and YouTube have always had an odd relationship: YouTube first helped Universal and Sony build Vevo as a way to solve an expensive problem for the video site — it owed the labels money every time someone played one of the label’s clips.
The new structure allowed the labels to share ad revenue generated from video views on Vevo as well as on YouTube, where the majority of music video consumption happens. Google eventually made an equity investment in Vevo as well.
But over the years, various music label execs, along with multiple Vevo CEOs, have debated whether Vevo could be its own, valuable asset, or whether its main purpose was to collect ad revenue and pass it back to the labels. Meanwhile, various YouTube executives have expressed frustration about dealing with Vevo instead of working with the labels directly.
Depending on your mindset, you can now argue that YouTube has moved much closer to making that happen by stripping away Vevo’s ad sales exclusivity. That follows another move earlier this year to strip the Vevo branding from musicians’ YouTube channels.
Vevo declined to comment for this story. Here’s a statement YouTube attributed to Kyncl: “The availability of Vevo in Google Preferred enables UMG, Sony and Vevo to participate in YouTube’s most premium inventory sold to advertisers. It also increases the sales force deployed against music videos and maximizes revenue for artists and songwriters.”
This article originally appeared on Recode.net.
