By Ryan Nakashima, Business Writer
LOS ANGELES (AP) --YouTube and Universal Music Group are teaming up on an online music video venture that will launch later this year with Universal’s entire catalog of nearly 10,000 music videos.
The companies will share ad revenue on the Vevo.com site, on a Vevo channel on YouTube and on a tailor-made video player that can be placed on social-networking pages and other sites. The free-to-view package will carry ads, including video spots of up to 15 seconds preceding the music video.
“We believe that video is the best opportunity for revenue generation right now,” said Rio Caraeff, executive vice president of Universal’s eLabs digital business strategy unit.
“The advertisers and brands are more comfortable with video as a vessel for their message and their advertising spend. Streaming audio is harder to monetize under an ad-driven model right now.”
As an added incentive to Universal, the player will feature a button enabling users to easily buy the tunes digitally through Apple Inc.’s iTunes and Amazon.com Inc., which send most of the revenue from music sales to the labels. For now, videos will not be for sale.
Universal will spend tens of millions of dollars on the project and Vevo will be a wholly owned Universal subsidiary, Caraeff said. YouTube, a subsidiary of online advertising and search leader Google Inc., will provide the technology.
Universal, a unit of France’s Vivendi SA, is the world’s largest recording company and already has the most watched channel on YouTube with some 3.8 billion views since August 2006.
Doug Morris, Universal’s chief executive, is in talks with the other major recording labels – Warner Music Group Corp., Sony Music Entertainment and EMI Group Ltd. – about participating in the venture.
David Eun, Google’s vice president of strategic partnerships, said that previously, YouTube’s relationship with major content creators like recording labels has be en “fraught with tension and animosity and sometimes lawsuits.”
“There hasn’t been a genuine partnership that I think this model represents,” he said.
In December, Warner Music pulled all of its music from YouTube, saying the payments it received did not fairly compensate the label or its artists and songwriters.
Even Neil Young jumped into the fray, arguing on his Web site that YouTube had underpaid Warner compared with other labels, resulting in a shutdown that “penalized” artists like himself.
Viacom Inc. is also suing YouTube for $1 billion, saying the site infringes on copyrights of its shows, including Comedy Central’s “The Daily Show with Jon Stewart” and Nickelodeon’s “SpongeBob SquarePants” cartoon.
YouTube will continue to host and generate ad revenue off user-generated content, including recorded music accompanied by minimal original video, but those items won’t be hosted on Vevo unless they stand out in some way, Caraeff said.
Vevo will also create other music video programming to give the service personality and edge, much like video disc jockeys, or VJs, have done on MTV, Caraeff said.
“It has to have soul,” he said. “I’m not going to say we’ll have VJs, but it will have a particular voice.”
Google Opens Its Defense In Antitrust Case Alleging Monopoly Over Online Ad Technology
Google opened its defense against allegations that it holds an illegal monopoly on online advertising technology Friday with witness testimony saying the industry is vastly more complex and competitive than portrayed by the federal government.
"The industry has been exceptionally fluid over the last 18 years," said Scott Sheffer, a vice president for global partnerships at Google, the company's first witness at its antitrust trial in federal court in Alexandria.
The Justice Department and a coalition of states contend that Google built and maintained an illegal monopoly over the technology that facilitates the buying and selling of online ads seen by consumers.
Google counters that the government's case improperly focuses on a narrow type of online ads — essentially the rectangular ones that appear on the top and on the right-hand side of a webpage. In its opening statement, Google's lawyers said the Supreme Court has warned judges against taking action when dealing with rapidly emerging technology like what Sheffer described because of the risk of error or unintended consequences.
Google says defining the market so narrowly ignores the competition it faces from social media companies, Amazon, streaming TV providers and others who offer advertisers the means to reach online consumers.
Justice Department lawyers called witnesses to testify for two weeks before resting their case Friday afternoon, detailing the ways that automated ad exchanges conduct auctions in a matter of milliseconds to determine which ads are placed in front of which consumers and how much they cost.
The department contends the auctions are finessed in subtle ways that benefit Google to the exclusion of would-be competitors and in ways that prevent... Read More