Google, Universal Music Group Partner To Build Vevo
The two companies plan to share advertising revenue generated on YouTube and on Vevo by UMG content.
Google and Universal Music Group (UMG) on Thursday said that Google's YouTube subsidiary will provide the technology infrastructure for Vevo, a new music and entertainment Web site that will feature UMG videos.
As part of the deal, YouTube has renewed its partnership with UMG, enabling the video-sharing site to continue to host user-generated videos around that world that include copyrighted UMG music and visuals.
Thanks to YouTube's content identification tools, content owners like UMG have the option of running ads against uploaded videos that make unlicensed use of copyrighted material. To date, about 600 YouTube partners have chosen to use these tools, which give them a choice of blocking unauthorized content, running ads against it, or simply tracking how it performs.
According to a YouTube spokesperson, claimed content generates at least twice as many views, and ad impressions, as videos supplied by the content owner. This suggests that YouTube's form of content aggregation creates value rather than merely redistributing the wealth.
Google and UMG plan to share advertising revenue generated on YouTube and on Vevo by UMG content. And that revenue should be higher than it has been because Google recently rolled out AdSense For Videos, which delivers a higher click-through rate, thanks to contextual targeting, than the previously available display ads.
Vevo is scheduled to launch later this year.
"Technology has allowed fans to discover music in endless ways while creating new business opportunities for artists and labels alike," Google CEO Eric Schmidt said in a statement. "At Google, we are committed to promoting greater innovation and choice and are thrilled to be working with UMG in what will surely be an exciting new service for consumers, advertisers, content creators, and the music industry at large."
The thrill can be at least partially attributed to not being sued. The deal stands in sharp contrast to the ongoing $1 billion copyright-infringement lawsuit filed by Viacom against Google and YouTube in 2007 and the $125 million Google agreed to pay to settle a copyright-infringement lawsuit filed by book publishers in 2005.
UMG's YouTube channel has accrued some 3.5 billion views, which makes it the most watched channel on YouTube. Doug Morris, chairman and CEO of UMG, said in a statement that he expects that Vevo will launch with more traffic than any other music site in the world, traffic that represents the most-sought-after advertising demographic.
Vevo will have its own channel on YouTube, and, more significantly, the new video site will run its own embedded video player on YouTube. This will give Vevo and UMG more control over branding, advertising, and traffic.
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