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Can Vevo find a model that works – and make the music business rich?

Can Vevo find a model that works – and make the music business rich?

November 23, 2016 / No Comments

Vevo is the #1 music platform worldwide.”This is what Vevo, the seven-year-old online video startup co-owned by Universal and Sony, proudly tells its prospective advertisers.

Although it might not be the most talked-about – or certainly the most lucrative – music service in existence, Vevo has a fair defense for the boast. Every month, the platform reaches 400m unique users, and serves more than 19bn total views.

Compare that to Spotify, with just over 100m active users worldwide, and Vevo’s scale starts to sink in.

Unlike Spotify, however, Vevo doesn’t have any paying customers.

That’s a situation hurting its bottom line, and one CEO Erik Huggers isn’t ignoring – with plans to launch a subscription tier in the near future.

Yet Vevo’s plot to develop a healthy business model, and make music rights-holders rich in the process, remains heavily reliant on digital advertising.

And when it comes to ‘free’, Huggers realizes he’s fighting a great deal of cynicism in label land.

According to IFPI data, recorded music rights-holders received $2bn from subscription streaming services last year, but ad-funded platforms contributed just $634m.

Over at Spotify, the difference was even more marked: the Swedish platform generated $219m from ads in 2015 and $1.95bn from subscribers – with the latter providing 90% of total revenues.

You can see why labels are spooked by the idea of relying too heavily on ad-funded music.

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