Posts for 'Sony BMG'

  • Vevo Launches: Decent Start, Lots of Work Ahead

    Vevo, the much-heralded "Hulu for the music industry" venture backed by Universal Music Group, Sony BMG, Abu Dhabi Music Company and Google/YouTube (and with video provided by EMI as well) officially launched late last night. I've been browsing around the site this morning and my first reaction is that it's a decent start, but has a long way to go if it is to fulfill its lofty mission.

    Conceptually, I like the idea behind Vevo. The music industry, which has suffered multiple blows over the last 10 years, is getting together to create a destination site where music videos are distributed legally, with a coherent ad strategy. YouTube's participation means that videos that have been watched in the labels' YouTube channels can be branded Vevo, giving the new site tons of visibility, and helping migrate traffic over time.

    From a design standpoint, the Vevo site has a similar feel to Hulu: large, wide-screen images on the home page promoting certain videos/artists, thumbnails below, of top videos, playlists and artists, quick links to most popular today, and search/navigation. A nav bar at the bottom of the screen invites users to easily create new playlists by adding up to 75 videos with one click. Videos are embeddable and shareable, and there are quick links to buy the music at Amazon and iTunes. The site was periodically very slow to load and occasionally even gave me a server error page. I don't know how much of this to ascribe day 1 hiccups that will be worked out over time or really poor capacity planning.


    Less clear to me is how Vevo distinguishes itself from a user experience standpoint from YouTube itself. This has been a question that's nagged at me since the Vevo concept was first unveiled - how do the partners plan to make 1+1=3? The partners have made references to being indifferent to whether users watch at or YouTube, presumably because there would be similar advertising on both with similar splits. Yet, my experience going back and forth between the sites, albeit very limited, reveals lots of inconsistencies and a lot of promotional leverage left untapped.

    Focusing on U2, one of my personal favorites, I found only about a dozen of the band's music videos on Vevo. Switching over to YouTube, I found many more tracks, such as "Beautiful Day," "I Still Haven't Found What I'm Looking For" and "Where the Streets Have No Name," all in the Universal Music Group's channel. All of the videos were monetized: the first was preceded by a 15 second pre-roll ad for Chevy Malibu and the latter two carried an overlay ad to "Play Free Games" which was accompanied by a companion ad in the right column (the overlay was incredibly distracting, but that's another story). None of the videos had any Vevo branding whatsoever. It's also worth noting that even the UMG channel in YouTube has no Vevo branding or promotion.

    Conversely, a search in YouTube for "All Because of You," a video that is available on Vevo, loads in YouTube with full Vevo branding. Above the video window are options to "Watch with Lyrics," "View Artist Profile," and "Create a Playlist." Clicking on any of these carries you over to the Vevo site. However, none of these actions are well-executed. "Watch with Lyrics" restarts the video, whereas a much slicker implementation would resume playing on Vevo from the point of drop-off. "View Artist Profile" simply displays a list other videos available, without any real artist profile information offered (background, upcoming concerts, etc.). And "Create a Playlist" just brings you to Vevo's home page, without any prompts for what to do next if indeed you want to actually want to create a playlist.

    Elsewhere, the Vevo team hasn't even bothered to update its blog to officially announce the site's launch (it still says "Launching Tonight!" at the top). That's a missed opportunity, especially considering there was a splashy launch party in NYC last night (attendees ranging from Google's Eric Schmidt to Rhianna, Bono and Mariah Carey) and pictures and video from that event would have been a big drawing card. Come on - where's the Vevo PR team here?

    How much of this should be forgiven to it being early days of Vevo's launch is a subjective call. From my vantage point though, I think the Vevo team could have done a lot more to think through and execute on the user experience. Back in November '07, when I looked at Hulu in its private beta, I gave it a solid B+. The Hulu team had clearly obsessed about each and every detail of the site - and have continued to do so. Hulu's user experience isn't perfect, but it has set the bar very high for those seeking to emulate it. For now Vevo probably rates around a C; much work is still ahead.

    What do you think? Post a comment now.
    Update: Vevo's blog post that "It's awesome that millions of people are checking it out, but the response has been orders of magnitude larger than even our highest estimate" suggests poor capacity planning by the Vevo ops team. I mean,"orders of magnitude larger"? If that's really the case then the ops team gets serious demerits for a ridiculously big miss.
  • Exclusive Brightcove Update with Jeremy Allaire

    Yesterday I did an hour-long briefing with Jeremy Allaire, Brightcove's CEO/founder at their Cambridge offices.


    If I were to make a list of the 5 questions I've been asked most frequently over the last two years, "What do you think about Brightcove?" would easily be on the list. Certainly a lot of the attention Brightcove has generated relates to its fund-raising leadership. Through three rounds, the company has raised $82 million, including the monster $59.5 million C round closed in January 2007.

    By my count the only pure-play, private broadband video company that has raised more is Hulu, which raised $100M in one round from Providence Equity. But Hulu's probably not a fair comparison given that NBC and News Corp are the company's primary owners and are contributing exclusive content. (btw, if anyone has a different take on who's raised more, please leave a comment)

    So this briefing was a great opportunity to get a first-hand update and also channel many of the follow-on questions I've been asked about Brightcove. (Full disclaimer, Brightcove is a VideoNuze sponsor.) Jeremy also shared some new stats with me that haven't been disclosed before.


    Brightcove's positioning has shifted around in the 18 months since its official launch causing many industry tongues to wag.

    Jeremy explained that in the summer of 2007 the company did a candid assessment of its competitive standing across areas in which it was involved. While his original vision included a consumer-facing destination site (named Brightcove TV), this assessment concluded that with YouTube's dominance, Brightcove's goal to be number 1 in that business was unlikely to ever materialize. Further, the potential for conflict with its own media customers had become real. So though Brightcove TV had 8 million unique visitors in August, 2007 according to comScore (making it the number 5 player in that space), Brightcove decided to de-emphasize it and reduce investment spending on it to zero. As a result, Brightcove TV now functions mainly as a showcase site.

    The company narrowed its focus to its broadband media publishing and management platform, which Jeremy says is now used by 4,000 professional publishers (sample list here), which Brightcove thinks makes it number 1 among its competitors. These publishers operate 7,000 web sites with an estimated combined reach of 120 million unique visitors per month.

    The platform business model includes an annual software licensing fee with upside revenue based on the customers' usage. Jeremy denied that the company is taking ad revenue shares in lieu of platform fees, a rumor that has persistently circulated in the market. Brightcove has also continued to build out a professional support team serving the gamut of design, support, integration and customization required by customers.

    Broadband Video Market and Advertising

    From Jeremy's vantage point the major media companies Brightcove is serving are aggressively focused on building out their direct-to-consumer broadband video destinations, and only recently have they begun also considering syndication. Brightcove's customers' business models skew overwhelmingly in favor of advertising support, with only negligible interest being shown in Brightcove's commerce capabilities.

    On this point Jeremy and I have been in agreement for a long time - the macro factors driving ad-supported broadband businesses are very strong, while those driving paid downloads continue to be challenged. The key catalysts for paid models will be mass connections from broadband to TVs, better portability and improved competitiveness with the DVD platform. In the longer-term all of these will no doubt fall into place, however, for as far as the eye can see, broadband is going to remain an ad-dominated industry.

    The follow-up question of course is, what kind of advertising will predominate? Brightcove supports a range of options and Jeremy said that recently interest in overlays is running very high, though 15 second pre and mid-rolls are still used by 99% of its customers today. There's a lot of planning or rolling out of overlays coming shortly by Brightcove customers. was shown as an example of a hybrid pre/mid-roll and overlay model that Jeremy thinks will become more prevalent.


    Brightcove is also starting to see heightened interest in syndication, and the company offers a set of tools to support it. One example Jeremy showed which I haven't followed is Sony BMG's "MusicBox" service, which offers an array of syndication options. Sony BMG demonstrates that for sites serious about syndication, it's about far more than moving video files around to third parties. Of course the goals of syndication are still to proliferate the content and brand to drive new revenues from far-flung corners of the Internet, but the mechanisms for optimizing this can be quite involved. There's integration of players, advertising, widgets and more. I've been very bullish on syndication for a while, and the actions by Hulu and CBS's Audience Network to distribute their content show real signs of life in the syndication model.

    Going Forward

    Not surprisingly, Jeremy's extremely bullish on broadband's future growth and sees opportunities galore to grow Brightcove's revenues by deepening its penetration of existing customers, driving more international business, especially in Asia, and expanding its fledgling presence in the enterprise/government sectors, where there's also been a lot of recent interest.

    Regarding competition, Jeremy says Brightcove still sees internal development as an alternative being considered by some major media companies, though to a lesser and lesser extent recently. He also volunteered that both Maven and thePlatform are two companies Brightcove sees most often competing for deals. When asked what differentiates Brightcove, Jeremy cites product quality, ease-of-use, customer/market leadership, quality of its people and R&D. On this last point, he believes Brightcove's relatively deep pockets have helped it maintain a far more aggressive R&D budget, which grew by 300% this year.

    Key upcoming priorities include launching "Brightcove Show", its new HD initiative, "Aftermix", its mash-up feature, which just finished up its beta test, multimedia capabilities (photos and audio) and enabling a slew of social/sharing features.

    I couldn't resist asking Jeremy about Brightcove's last round valuation rumored to be north of $200 million. I've heard much skepticism in the market that the Brightcove's platform-centric strategy does not justify this lofty figure.

    Jeremy's response is that based on the company's current revenue and recent growth trajectory, it has "grown into" its valuation and that its multiple is comparable to others he's aware of. His main objective is building a "significant global business" and if that's accomplished then there will be numerous options open for what ultimately happens with the company. He wouldn't comment on M&A, IPO or other potential exits, only saying that he feels no pressure from his investors to liquify their positions any time soon.

    To achieve his global ambition, Jeremy says he's focused primarily on what actions Brightcove needs to make to dramatically scale the business, which he thinks can drive a real premium for Brightcove's valuation. To the extent that broadband remains mainly an ad-supported business, I think Jeremy correctly understands that scale - in customers, streams, usage, geographic reach, etc. - are absolutely central to success. When asked the classic "what keeps him up at night?", he cites as his chief source of insomnia the challenge of building out every part of the organization to support his goal of massive scale.

    As Brightcove continues to evolve and grow, one thing is for certain - all eyes in the broadband industry will be watching its progress.

  • Music Videos are Another Example of Broadband's Ability to Create Unforeseen Revenues

    On my flight home last night I was thumbing through my hotel-provided USA Today and happened on this interesting piece about how record labels are transforming their music videos from promotional tool to a bona fide new revenue source. Chalk up another unforeseen win for broadband's ability to enable new business models.

    Rio Caraeff, EVP of eLabs, Universal Music Group's digital division says that licensing its music videos to the likes of Yahoo, AOL, YouTube and others now generates over $20M/year and is growing briskly. Supporting a forecast of solid growth ahead, Ian Rogers, Yahoo Music's GM believes that viewership of music videos will expand by "10 to 100 times over the next one to two years."

    According to comScore, Yahoo is the web's #1 music destination, pulling in 23.4M uniques in August. Caraeff also noted that streaming accounts for the lion's share of the revenue, with paid downloads of music videos still miniscule. He cites the best-selling download of all-time, a Justin Timberlake single as generating only 58K buys, which, at $1.99 apiece, adds up to less than $120K.

    None of this is to say that music videos won't continue to be used as promotional fodder. But these nascent, growing licensing and ad-sharing revenues show broadband's power to mine content value that was previously inaccessible. Sports leagues, particularly, have been masterful at this as well, driving successful broadband-only subscription businesses. I expect others to sprout up as well.

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