Vevo Aims to Help Music Companies Cash in on Video

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Moreover, Warner has hired online video marketing company Outrigger to sell advertising around its videos, so Warner controls the inventory next to its videos even when they are syndicated out to a service such as AOL Music. Advertisers are playing a deeper role in the videos, says Outrigger CEO Mike Henry. Nokia (NOK), for example, sponsored a video from alternative dance band Cobra Starship: A Nokia phone appears in the video. "Vevo is focused on a single destination," says Henry. "We're focused on the artist."

Vevo-branded videos on MTV?

One advantage the Vevo model will offer, however, is that it can draw large audiences on a scale attractive to top-brand advertisers, says Vevo CEO Caraeff. Even before the launch, 20 advertisers have signed on, including AT&T (T), say Caraeff. Vevo also aims to give advertisers the opportunity to partake in interactive features with fans, such as creating branded playlists with fans. And by offering a separate channel on YouTube—with its own dedicated advertising sales staff—Vevo can offer a safe environment to lure advertisers that might be skittish about YouTube's racier material, Caraeff says.

Fans can also access Vevo directly at its own Web site. And much the way Hulu syndicates its programming, Vevo will license video to other sites, branded on screen as Vevo video. Caraeff imagines a day when Vevo would negotiate to sell its videos to MTV and Vevo's brand would appear on the TV screen as the video plays.

But what happens to all those unlicensed music videos on YouTube, from old footage of Frank Zappa shows to iPhone videos of a recent Kings of Leon concert? Will they be taken down so as not to compete with Vevo's videos, even though music is the most popular video category on YouTube? Apparently not. Caraeff says he's not worried that people might prefer to watch lesser-quality video. "We are all about what is best for the fan who loves music," he says. "If we provide a better experience for fans, they will come to our service. That's what will guide this company."

Lowry is a senior writer for BusinessWeek in New York.

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