Brainstorm Tech 2010

Where the Fortune 500 and the innovators meet to shape the future of business. (July 22-24, 2010)

Vevo bets on advertising for music videos online

July 2, 2010: 10:58 AM ET

This is one in a series of articles leading up to Fortune Brainstorm Tech, which takes place July 22-24 in Aspen, Colo. The articles will look back at the progress of companies that presented at Brainstorm in 2009 as well as look forward to those that will present this year.

By Shelley DuBois, reporter

Music videos fall into that category of much-loved content on the Internet that has companies scrambling to turn into cash from advertisers. Vevo, right now, is one of the major players.

The company has partnered with Google (GOOG), Sony (SNE), and Universal Music Group to create a profitable platform for high quality music videos online. The videos stand out -- they don't look like grainy YouTube clips from a phone camera. On the other hand, Vevo doesn't provide the grab-bag viewing experience where videos of piano-playing cats are in the stack next to Usher's slick new single. But YouTube is actually a huge feeder for Vevo videos -- the majority of Vevo's viewers come from its YouTube channel.

Vevo wants to create a different experience. It's trying to cultivate a brand online that satisfies people's desire to see artists' music videos with a vetted, one-stop shop.

How will it carve out its web niche? CEO Rio Caraeff -- who previously worked at both Universal Music Group and Sony -- will be coming to Fortune's Brainstorm Tech conference to hopefully flesh out some of those ideas. So far, the website has mentioned beefing up Vevo's social networking features.

As it is, users can sign into a Vevo.com account, group their videos into playlists, highlight their favorite songs, and read comments from other users. They can create and store a video playlist. Vevo is also building offerings for the iPhone and iPad, which should boost business if it's done right. Three-minute long music video clips seem like digestible content for mobile screens. The company tapped into high definition live-streaming when it broadcast the opening concert of the FIFA 2010 world cup on July 10. Caraeff has said that live-streaming could be key for Vevo in the future.

Part of Vevo's plan is that sharp videos by popular artists will draw enough users that advertisers will follow. Luckily for Vevo, Universal has some big names. Vevo hosted Lady Gaga and Beyonce's soft core prison kitchfest "Telephone" video. The official Vevo video on YouTube has gotten over 60 million views since it was posted on March 11. Vevo also has videos by power icons Lil' Wayne, Taylor Swift and Justin Beiber, among others.

It's trying to tap into the indie video market too. Vevo just teamed up with Schick Hydro to create a channel that promotes up and coming artists. The partnership with the razor brand may seem a little unusual, but Schick Hydro Senior Brand Manager justified it this way in a press release:  "We're committed to refreshing men's experiences by reaching them at their passion points and providing an unexpected benefit -- whether it's a surprisingly hydrating and comfortable shave, or a new music experience."

Vevo will also have to contend with MTV, which just decided to get back into the business of making movies after its reality show-driven hiatus.  On June 30, MTV announced a digital content partnership with Warner Music Group (WMG) that would give MTV exclusive ad rights to videos from Warner's artists.

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About This Author
Shelley DuBois
Shelley DuBois
Writer - Reporter, Fortune

Shelley DuBois writes on management issues for Fortune.com. Before joining Fortune, she was a producer for National Public Radio's Science Friday and worked for Wired. Shelley has a graduate degree in science, health and environmental reporting from New York University. She lives in Brooklyn.

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