Everyone is rooting for subscription. And it's hard to imagine anyone getting more hype and funding than Spotify. But the music industry may already be staring its killer app in the face: YouTube. “YouTube is music's killer app," declared ForresterResearch analyst Mark Mulligan at Canadian Music Week in Toronto. “The music video remains the consumer usage sweet spot."
Vevo chief Rio Caraeff was more than happy to second that notion, especially given his hand-in-glove relationship with the video giant. “YouTube is like a cable network, and Vevo is like the channel," Caraeff described. And, that's a model that is producing some gargantuan stats. Caraeff pointed to a whopping 750 million streams per month, and a collection of 350 advertisers. “The volume of streaming is tremendous," Caraeff said.
But are the revenues? One recent calculation showed that one radio spin is equal to roughly 250 YouTube streams, at least as it relates to artist revenue. “That doesn't sound right to me," Caraeff responded, though other analysts and executives—most notably Russ Crupnick of NPD Group—were openly questioning the fuzzy logic behind freemium and non-paid models. “The freemium model is not going to be sustainable," Crupnick stated during his morning presentation. “Consumers are essentially unwilling to pay because we've trained them not to pay."
But can consumers be 're-trained,,' or is the music industry getting forced to play by entirely different rules? Caraeff seemed more interested in latching onto existing revenue channels like mobile phones, where monetization paths already exist. “It's like asking consumers to pay for the air-conditioning at a restaurant," Caraeff noted.
But when it comes to “conditioning," Caraeff has a mission to totally change the way that advertisers view music, not necessarily consumers. “We're trying to recondition the advertising world that this is an experience that is valuable, and you can't get it on the cheap."
But ramping CPMs into the stratosphere has been tough, at least according to the whisper numbers we're hearing. And even if Vevo 'makes it,' this will not be a platform with riches for everyone. “A large percentage of views come from a small percentage of artists, and 25 brands drive 80 percent of our revenue," Caraeff relayed. “There is a tail, but it's not a very fat tail."
Vevo chief Rio Caraeff was more than happy to second that notion, especially given his hand-in-glove relationship with the video giant. “YouTube is like a cable network, and Vevo is like the channel," Caraeff described. And, that's a model that is producing some gargantuan stats. Caraeff pointed to a whopping 750 million streams per month, and a collection of 350 advertisers. “The volume of streaming is tremendous," Caraeff said.
But are the revenues? One recent calculation showed that one radio spin is equal to roughly 250 YouTube streams, at least as it relates to artist revenue. “That doesn't sound right to me," Caraeff responded, though other analysts and executives—most notably Russ Crupnick of NPD Group—were openly questioning the fuzzy logic behind freemium and non-paid models. “The freemium model is not going to be sustainable," Crupnick stated during his morning presentation. “Consumers are essentially unwilling to pay because we've trained them not to pay."
But can consumers be 're-trained,,' or is the music industry getting forced to play by entirely different rules? Caraeff seemed more interested in latching onto existing revenue channels like mobile phones, where monetization paths already exist. “It's like asking consumers to pay for the air-conditioning at a restaurant," Caraeff noted.
But when it comes to “conditioning," Caraeff has a mission to totally change the way that advertisers view music, not necessarily consumers. “We're trying to recondition the advertising world that this is an experience that is valuable, and you can't get it on the cheap."
But ramping CPMs into the stratosphere has been tough, at least according to the whisper numbers we're hearing. And even if Vevo 'makes it,' this will not be a platform with riches for everyone. “A large percentage of views come from a small percentage of artists, and 25 brands drive 80 percent of our revenue," Caraeff relayed. “There is a tail, but it's not a very fat tail."
