Direct swipe from MarketingVox.com:
YouTube and Universal Music Group are contemplating an alliance by which the former would build a music video hub for the latter.
According to The Wall Street Journal, YouTube will also provide ad sales support and a platform to distribute Universal video content to other sites.
The pending project’s been tentatively dubbed “Vevo” and has been underway since last year. People familiar with the matter claim it is in advanced stages of production.
Financial details of the potential liaison were not revealed, but the partnership represents another attempt by YouTube to step up its premium content offerings.
It would also avail YouTube a fresh opportunity to monetize music videos. In January it broadened an existing ecommerce effort that enables users to buy tracks featured in a video they’re watching. They typically have the option to purchase direct from a record company, from Amazon or iTunes.
This is interesting for quite a few reasons. Universal was the first of the major record distribution companies to strike a deal with YouTube in order to get paid for their content. In these trying industry-times, many record labels are trying to find any way possible to make a dime.
Years ago, Yahoo! used to be a very popular site for fans to go watch promotional music videos. Yahoo! used to use the music videos and then run commercials between viewings. It was Universal Music Group, upon realizing the ad-revenue Yahoo! was making, that decided they should get a portion of this money that Yahoo! was making. Taking a fraction of a cent per video-stream, this became a profitable (and important) venture for Universal, and other majors shortly followed.
Taking a similar approach with YouTube is important not just to major distributors, but to artists as well.
At this time, indies are kind of having to bite-the-bullet and this profit-sharing system isn’t available… but hopefully that will change for all in the near future.
This actually produces an interesting question: are music videos driving traffic to these websites, OR are these websites helping to sell downloads / CDs by having these music videos available for viewing? Who’s helping who more?