Vevo Turns Up Heat on MTV in Online Video Dispute

Upstart Is Top in Video Views and It's Targeting TV

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NEW YORK ( -- Music videos barely appear on TV any more, but the battle to control them online -- and sell them to marketers in turn -- is becoming a full-fledged spectacle as Vevo moves from upstart to full-fledged nuisance to MTV.

Universal Music Group recording artist Justin Bieber.
Universal Music Group recording artist Justin Bieber.
Vevo, the joint venture between Universal Music Group, Sony and Abu Dhabi Media, is planning to turn up the heat by launching an iPad app next month and versions of its service around the world next year. But the bigger tweak to MTV will actually arrive in the form of versions of Vevo for net-connected TV sets and set-top boxes.

With expansive long-term rights to music videos from UMG, Sony and EMI -- as well as a deal with YouTube -- Vevo is cornering an increasing chunk of the online music video market. As of September, the company was the No. 5 video site in the U.S., behind Yahoo, Facebook, Microsoft and, of course, YouTube, but well ahead of Hulu, the TV distributor to which it is most often compared.

And it now appears quite a bit bigger in video views than MTV, which last summer snapped up the rights to the last big tranche of music videos not under Vevo's umbrella, Warner Music Group. This is a little misleading, of course, because even though MTV has a deal with Warner, it hasn't yet persuaded Google to credit MTV for views of Warner videos on YouTube. That was the founding principle of Vevo -- that views on YouTube would be credited to the joint venture -- and the reason for its immediate scale and rapid growth. MTV hasn't yet enjoyed the same arrangement.

Now both are locked in a tense standoff that's unlikely to be resolved soon. It boils down to this: Vevo signed three of four major labels to long-term, exclusive distribution and ad-sales deals. It now wants MTV to become a distributor of Vevo's service, just like AOL, Yahoo, CBS or Univision. MTV has demurred, so Vevo pulled those videos last summer. MTV, meanwhile, snapped up the rights to the remaining major label. And now both sides want better terms but, more important, the right to sell ads no matter where their videos appear.

"We are trying to do a deal with MTV and offering them the same syndication deal we have with everybody else, with Univision, with AOL, CBS and other companies," said Vevo CEO Rio Caraeff in a call from an Allen & Co. retreat in Cody, Wyo. "The point is we are not trying to discriminate against MTV or offer them terms different from anybody else."

For MTV, this would mean allowing Vevo to sell ads on MTV's properties and targeting MTV viewers, something they're reluctant to do. But the standoff means the vast majority of the world's popular music videos off MTV, the site of the media company that popularized the form. Because MTV is about a lot more than music videos -- i.e., "The Jersey Shore" -- it's not a crisis, but MTV and apparently Warner do think they've got the audience, brand and artist relationships to better market music videos on the web.

"Vevo is a video search engine, whereas MTV Music Group provides a comprehensive curated experience that includes music news, interviews, live streams, music videos and more," said MTV spokesman Nathaniel Brown. That, and MTV still dominates in site visits, with more than 60 million unique visitors in September.

Vevo's last growth-spurt coincided with the addition of EMI content, which started coming into the system in July. The question is how long Vevo and MTV can live without each other. Perhaps MTV can go longer than Vevo because MTV is very little about music videos, when that's Vevo's entire reason for being.

But Vevo is planning to stand a little harder on MTV's toes. First off, Vevo's rights allow them to stream videos to any internet-connected device. Increasingly, that means TVs. Most people got the first look of what that looks like with Vevo's presence on Google TV, but Mr. Caraeff said that's just the first of many big-screen devices to have Vevo.

Vevo is also about to make that international expansion, something that Hulu has tried to do for two years with no success. Because Vevo acquired global rights to all its label partners, it's only a matter of time. Further, Vevo is working directly with artists to create original programming and live events (can you hear them now, MTV?). They've produced or aired more than 100 of these in the past year -- and sold them to brands.

The reason Vevo is being so precious about who gets to sell videos is that it's trying to get marketers used to spending $20 per thousand views on music videos -- rather than the $5 marketers have paid on YouTube and elsewhere in the past. But Vevo does have to share revenue back to YouTube --30% of the gross.

Vevo Rankings charts

Before Vevo, artists were getting a penny a stream in a licensing deal with YouTube. So far, Vevo hasn't improved those economics much, partly because even with higher ad rates, they're not selling out and Vevo itself is an expensive new player taking a share of the ad revenue.

Getting artists paid?
But Mr. Caraeff said those rates are improving and some artists are seeing improved revenue. "Certain artists and content licensors are making more than they were before," he said. "What's more important this is a scaleable model -- they can make a lot more for a longer period of time. In the old days, the hits lost money."

But at $20 CPM -- a TV-scale ad rate -- Vevo can sell the same ad across all screens on which Vevo content appears, which would be great for Vevo and its artists and competitive to MTV. That said, no one thinks Vevo and MTV can live apart, not least Mr. Caraeff. Without Warner Music and MTV, there is still a big hole in the catalog and a potential audience not being reached.

"In the long run we want to offer our audience all music programming from all content licensors on all places on the web," he said. "That implies MTV and Warner."

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