Labels aim to profit on videos online

Majors band with YouTube to push content

The major music labels used to give away musicvideos to promote their acts — so much so that MTV used that largesse to build a cable network — much to the ire of music publishers.

But as their other revenue streams struggle, the labels are eying the Web as a way to make those promos more profitable for themselves, either by charging viewers to watch them or by selling advertising around the productions.

Enter Vevo, the brainchild of Universal Music Group chairman and CEO Doug Morris, which launches later this year. Plans are to turn the website, backed by UMG and Sony Music Entertainment, into a premium musicvideo and entertainment service that will lure the millions of fans who currently get their musicvids from YouTube and MySpace.

The idea is to turn Vevo into a Hulu for the music biz. Hulu has been able to drum up ad dollars by streaming familiar network and cable TV shows and studio movies. YouTube will provide the platform for the site, which will include a special Vevo-branded videoplayer. And while it’s is not one of Vevo’s owners, YouTube’s ties to the new service should provide it with the kind of professionally produced content it’s been coveting lately.

UMG already has a presence on YouTube, with its dedicated music channel generating 3.6 million streams each month.

Vevo would showcase musicvids from artists on UMG’s labels, which include Interscope Geffen A&M Records, Decca, Deutsche Grammophon, Universal Motown Republic Group, MCA Nashville and Polydor, as well as those from SMG’s Columbia, Arista, Epic, RCA, Jive and J Records, among others.

“We see this as a total, immersive music experience,” says once source, citing the labels’ “incredible library of content.” The UMG roster includes U2, Amy Winehouse, Diana Krall, Elton John and Lil Wayne, while SMG boasts Alicia Keys, Beyonce, Bob Dylan, Bruce Springsteen and Justin Timberlake, as well as popular catalog artists like Jimi Hendrix, the Who (with U) and Miles Davis (with Sony).

YouTube, like the record labels, has been trying to identify more ways to monetize its video programming. Its library of mostly user-generated vids may attract millions but advertisers have mostly shied away from having their marketing messages wrapped around that kind of content.

UMG and SME have yet to disclose whether Warner Bros. and EMI, who have been approached by Vevo, will add their own videos to the site once it bows. (The partners are also in talks with indie labels.) But that’s pretty likely, given how Hollywood has paired up for Hulu and video services like the one on Sony’s PlayStation Network.

Spokesmen at UMG and YouTube (the latter did not respond to calls or e-mails) were unable to comment on talks due to nondisclosure agreements.

As one insider put it, “a lot needs to happen between now and the launch date.”

In addition to musicvids, Vevo will offer everything from webisodes to “making of” minidocs. Previously unreleased archival material also no doubt will be mined for hard-core music fans.

Having content will be key to Vevo’s success, but that won’t guarantee profitability.

Yahoo Music’s two-year partnership with Nissan, which sponsored a series of intimate ad-supported concerts filmed in HD on a Fox lot soundstage to the tune of $30 million a year, provided a model for original music content on the Web. The venture, however, quietly died in December, with the economy in freefall.

Recently revamped MySpace Music also has most of the major record labels onboard but has struggled to establish itself with music fans.

While users will be able to access Vevo directly, YouTube, which according to Internet traffic tracker comScore attracts 60% of U.S. video watchers on the web, will also link to the site, as will other music-heavy destinations like MySpace, AOL and Yahoo.