Vevo still plans to launch a music video subscription service, according to CEO Erik Huggers – but the music biz shouldn’t start holding its breath just yet.
Huggers first floated the idea of a subscription service to run alongside Vevo’s free tier back in 2016 but, speaking around the opening of the video streaming service’s new European HQ in London, the CEO said it would not launch until it was “the right time”.
“When I first looked at subscription, I thought this was something we definitely wanted to do,” he said. “I was excited about the idea of several methods of revenue: sponsorship, advertising, and audiences paying for the service. But then, when you look at landscape of subscription in the US, there are so many niche, tiny services for subscription out there. I was worried about the ability to get the scale of subscription we needed, given that there were so many services out there. It doesn’t mean that it’s never going to happen. It just needs to be the right time.”
Huggers said that Vevo is not under pressure from the music industry to launch a subscription tier – as other services such as SoundCloud and YouTubewere – because it was part-owned by two of the majors (Universal and Sony) and was already contributing considerable revenues through its ad-funded tier. It’s also become increasingly important when it comes to breaking new music.
“We don’t really comment on our revenue numbers but they’re very, very healthy,” he said. “I would say that we contribute in a very good way to the ecosystem, given what we do today. We might be able to contribute more someday. We are the organisation that monetises those 275,000 official music videos. Subscription continues to be interesting for us – it’s a matter of when, not if.”
Huggers said Vevo’s owned-and-operated site had made great leaps in terms of traffic and monetisation recently, although its content on YouTube still represents by far its biggest source of views. Google-owned YouTube, which itself has a stake in Vevo, has had an increasingly fractious relationship with the bizof late, as rows continue over the so-called ‘value gap’. But Huggers said he had no desire to distance his company from its partner/rival.
“At the end of the day, I believe that the relationship with YouTube has been beneficial for Vevo.,” he said. “They are a massive platform which has 1.5 billion logged in users in a month. Are there opportunities to optimise the relationship, to improve things for the artist, for the label, for the manager, for Vevo? Of course there are.
“Five years ago, when we announced the deal with YouTube, young audiences were not massively on mobile, Instagram wasn’t that big, Snapchat probably didn’t even exist yet in the format that it does now. With the world changing as fast as it is, these deals become out-dated. That doesn’t mean we want to distance ourselves. We want to create a deal that helps artists, the labels, brands, etc – but most importantly, helps Vevo. This is about a recalibration of the relationship, not running for the hills.
“Having said that,” he warned, “When this deal was first struck, they were the only game in town. There was no other way to reach audiences at that scale. Now, there are loads of alternative routes that reach large audiences that are young and on a global scale. Is there an opportunity to potentially diversify those routes to reach those audiences in other ways? Yes.”
Huggers said Vevo was “always looking at ways to improve our relationship with YouTube” but also “always pursuing deals with other platforms”. So, with the music biz eagerly awaiting news of Facebook’s music/video play, would the social media giant be a potential partner for Vevo – or a potential rival?
“In the world of Silicon Valley, it is always a combination of both,” he said. “We have a very significant Facebook presence: we have a team that publishes on Facebook daily, hourly even; we do live Facebook events; it is a big piece of our social puzzle, including Instagram and WhatsApp. My sense of Facebook is that they’re more interested in allowing their audiences to upload videos that contain music. I don’t necessarily see premium music videos at the top of their list of priorities just yet – but that may change very soon.”