Peter Kafka

Recent Posts by Peter Kafka

Can Universal Music Run Its Own Hulu? It’s Going to Try.

vevo-logoAt first glance, it seems straightforward: The world’s biggest music company and the world’s biggest video site team up to make a new music video hub.

But Vevo, the arrangement announced by Google’s YouTube and Vivendi’s Universal Music Group yesterday, isn’t quite as straightforward as the two companies made it sound.

Some of the funkier details I’ve been able to discern so far:

  • Despite the reports describing Vevo as a joint venture between Google (GOOG) and Universal, it isn’t. Instead, Vevo will be a wholly owned subsidiary of Universal Music Group. The record label provides the content and staff; YouTube provides technology, and of course, access to all those eyeballs, via its own site.
  • In the near-term, YouTube will also provide a sales force for the site, but Vevo/Universal’s plan is to create its own team, eventually.
  • While initial reports indicated that Universal’s videos would still be available on YouTube itself, that’s not correct. You’ll be able to find, say, the new Lil Wayne single via YouTube search. But in order to watch the clip, you’ll end up clicking through to the new site. Only Universal’s “non-premium content” will be available on YouTube itself.

In other words: With YouTube’s help, Universal is moving all of its videos off of the world’s biggest video site onto its own platform. Think Hulu meets MTV.

Is Universal a likely bet to run a successful Web site? The label’s detractors, and there are plenty, are already pointing to the music industry’s litany of failures on the Web. If you weren’t paying attention to the music business’s online attempts a decade ago, Google “pressplay” and “MusicNet.”

And even if Google’s technical expertise makes it easier for UMG to get a decent site up and running, neither company has a real track record when it comes to getting big brands to pony up for video ads, which is supposedly the whole point of the site.

Lots of people made similarly disparaging remarks about Hulu, of course. There was no way that GE’s (GE) NBC and News Corp.’s (NWS) Fox were going to be able to launch a decent site, let alone provide a challenge to YouTube. But they did, and they are. So the Vevo folks have that example to inspire them. (News Corp. is the owner of Dow Jones, which owns this Web site.)

But even if UMG gets the site off the ground, there is a considerable risk for both the label and for Google. Because if it works, Vevo will be diverting a lot of eyeballs away from YouTube–yesterday’s press release boasted that UMG’s YouTube channel has racked up 3.5 billion views.

The idea is to provide advertisers with a clean, well-lit space that will make them feel comfortable enough to spend money. But part of YouTube’s appeal is that is a riot of  the good, the bad and the WTF? You may start out watching a U2 video, and 20 minutes later end up watching a clip of a doped-up 7-year-old after a visit to the dentist. If you end up at Vevo, you’re going to have be very interested in music videos–and, at least for now, just the ones that Universal owns.

Are there enough video watchers out there to justify a business with some 50+ employees, which is the number I’ve heard Vevo/Universal is looking at? And can Universal figure out how to turn those eyeballs into more money than they’d generate on YouTube itself? Got me. Can’t wait to find out.


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I’m a giant vat of creative juices.

— David Pogue on why he’s joining Yahoo