Consumers bop to rhythm of online music videos
LOS ANGELES -- Viewership of music videos moved from TV to the Web at such a fast pace that few saw it coming.
"Online is the single-largest place where consumers are watching music videos," says Rio Caraeff, executive vice president of eLabs, Universal Music Group's digital division. "When we release a video, we still put it on MTV and BET, but in terms of the most impact from audience and revenue, it's online."
Videos used to be given to networks such as MTV to sell CDs. Now, labels charge for video usage. "It was clear that all of our content needed to be paid for," says Thomas Hesse, president of Sony BMG Music Entertainment's global digital business unit. "The times when we could make our content available for free so someone would buy the CD are over. We drive usage to the Internet sites, so we should be paid."
Hesse wouldn't disclose exact figures, but Caraeff says licensing of music videos to sites such as Yahoo, AOL Music and YouTube reaps $20 million yearly for Universal and is growing steadily.
YouTube has been at odds with much of the entertainment industry because some of its users digitize content on their own and put it on the site without compensating the content owner. MTV owner Viacom is suing YouTube owner Google in a copyright-infringement case.
But Universal, Sony BMG, Warner Music and EMI have agreements allowing their music videos to be shown on YouTube. In exchange, they share in ad revenue. YouTube attracts the largest video viewing — including movie trailers, amateur productions and tech podcasts — on the Web, with 44.8 million visitors in August.
With 23.4 million visitors in August, Yahoo is the most-visited music site, followed by ArtistDirect, MySpace's music channel, AOL Music and MTV's music channels, including MTV.com, VH1.com and CMT, according to ComScore.
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