by Kyle Mammarella

Rio Caraeff, CEO of Vevo, the online music video service launched by Universal Music Group and Sony Music Entertainment in 2009, announced Tuesday that his company pulled in $150 million in revenue in 2011.

“In the last year alone we’ve generated over $150 million,” said Caraeff at the AllThingsD Dive Into Media conference.  “We’ve paid the labels about $100 million (over the last 2 years).  so we’re making money.”

Most of its audience comes from YouTube, where Vevo is one of the most popular channels.  It generates its revenue from advertising.  Because it streams high-quality music videos, Vevo is able command advertising rates that are on par with broadcast television programming.

This announcement comes amid rumors that Vevo will be dropping its partnership with YouTube and its parent company, Google, and moving over to Facebook.  Preliminary talks are reportedly underway, with Vevo meeting with the social networking giant at least twice.

While Vevo’s contract with Google is expected to last for at least another year, Facebook could be hoping for a deal similar to the one it has with Spotify, where Facebook acts as the distribution platform and Vevo provides the service to drive user engagement.

Facebook’s videos are not a prominent feature on the site and they are looking to improve their video engagement.  One of its goals is to keep revenues growing as it saturates key markets by keeping visitors on the site longer.  Over the past four years, Facebook’s user base has grown from roughly 50 million to 845 million, with users spending more than 9.7 billion minutes on average per day on the site.  Since they have already exhausted much of the supply of highly monetizable first world users, Facebook aims to make more money per user.  By integrating free music listening in the form of streaming Vevo videos, they would be taking the first step in the right direction.

On Wednesday, Facebook filed to go public and raise $5 billion.  It is on track to be the largest Internet initial public offering ever, with analysts noting they could be aiming for a far greater offering that would value it near $100 billion.  In recent months, they have rolled out new partnerships with companies like Ticketmaster, and is also said to be designing its own mobile phone.  Still, there is no real compelling Facebook-driven music service.  Expanding their streaming video service with Vevo could be a key component of their profit matrix, making the company’s stock more attractive to future investors.

Vevo’s popularity has boomed since it launched two years ago.  “From a volume perspective our growth has been tremendous,” said Caraeff.  “We had 300 million global views per month when we launched.  Today we’re seeing 3.5 billion views per month.  That’s about 42 billion views per year.”  They also have plans to expand rapidly in 2012, pushing into the mobile sphere and launching an Xbox application.  “The future of the music business is allowing billions of people around the planet to access music experiences,” Caraeff said.

Vevo continues to be an influential tool for artists.  In particular, its LIFT program, launched in January 2011, has given new and developing artists direct access to fans.  For eight-week blocks through the year, VEVO puts the scale of its platform behind one artist, which is selected from label submissions.  Each artist selected creates 10-20 original and live exclusive content pieces for the VEVO audience.  The program is sponsored exclusively by McDonalds.

The LIFT program seen significant impacts on social media engagement, sales and radio, driving consumer engagement.  One artist in particular, Jessie J, saw a surge in social media engagement after she started working with Vevo.  Prior to LIFT, she was virtually unknown outside of her native U.K.  Within eight weeks, her video views grew from 6 million to over 100 million.  Her social media following also expanded to more than 1.5 million fans, up from 85k fans from Facebook and Twitter combined.  Seventy percent of her total views now come from outside of the U.K.  A comScore survey measuring how fans discovered Jessie J found that nearly 60% were introduced to her through Vevo.

Should Vevo make the move to Facebook, it could mean fewer roadblocks from the music industry. Though Google did launch its own music service in November, it was delayed time and time again due to resistance from major record companies, and it still lacks licensing deals with Warner Music Group.  By helping to consolidate where users view and listen to copyrighted material, and allowing Facebook to provide greater audience viewership numbers, the pairing could ease contractual negotiations with record labels.

It is unlikely that Google will go down without a fight.  Vevo has enjoyed a longstanding and profitable relationship with the internet giant.  Whether they choose to part ways with YouTube remains to be seen.

Facebook and Vevo have not officially commented on plans for a partnership.

Kyle Mammarella is a New York based artist manager and music enthusiast.

Mike Masnick of Techdirt has a new study out coinciding with Midem that claims the music industry as a whole is not in a decline at all, rather it is undergoing a renaissance period.

Here are some of the key takeaways:

• Entertainment spending as a function of income went up by 15% from 2000 to 2008
• Employment in the entertainment sector grew by 20% — with indie artists seeing 43% growth.
• The overall entertainment industry grew 66% from 1998 to 2010.
• The amount of content being produced in music, movies, books and video games is growing at an incredible pace.

For the full study, visit Techdirt.com

via Pitchfork

by Marc Hogan

Millions of people learned about the Stop Online Piracy Act (SOPA) House anti-piracy bill and its Senate sibling, the Protect IP Act (PIPA), through a web-wide protest last week supported by Google, Facebook, Tumblr, and other technology companies, along with not-for-profit Wikipedia. The legislation got as far is it did in part thanks to the efforts of trade groups representing the movie and recording industries. But one special interest group close to our hearts has a significantly smaller megaphone: independent music.

The perspectives of several leading independent record labels who responded to Pitchfork’s requests for comment reveal the issue to be more complicated than slogans on either side suggest. To recap: SOPA and PIPA attempt to stop copyright infringement by foreign websites, but many, including us at Pitchfork, argue that they go too far. By the end of last week, both chambers of Congress had stepped away from the bills, leaving their fate in doubt. While it was easy to see the piracy debate in terms of us vs. them, small vs. big, or good vs. evil, the independent music community’s awkward position suggests a binary view is too simplistic.

None of the labels we contacted expressed support for SOPA or PIPA. But most tended to say copyright infringement is a problem that needs to be solved– and that it demands a better solution than either approving the bills in their current form or maintaining the status quo. One of the organizations pushing for a better answer is the Beggars Group, which includes Matador, XL, Rough Trade, 4AD, True Panther, Young Turks, and Too Pure. “Every effective piece of new forward-thinking law needs to strike a fair balance between competing interests,” says Beggars chairman Martin Mills, in a prepared statement. “Everyone needs legal protections, but everyone’s livelihoods must be respected and considered. We hope that the lines are a little more open for an open dialogue to craft new legislation that will be fair to all and strike the best balance between the needs of creators, technology companies, and the general public.”

Read full story at Pitchfork Media.

by Kyle Mammarella

Digital music revenues grew by 8 percent globally in 2011 to $5.2 billion, according to the International Federation of the Phonographic Industry’s (IFPI) annual digital music report.  This marks the first time the annual growth rate has increased since they began measuring digital revenues in 2004.

The IFPI, the recording industry’s main lobby group, touts the expansion of the “access” subscription model and increases in “ownership” digital downloads model as the driving forces behind this growth.  Digital music subscriptions increased 65 percent, from 8.2 million in 2010 to over 13.4 million in 2011, and digital downloads increased 17 percent, with 3.6 billion downloads (both albums and singles) purchased globally in 2011.

“The fact that these two models of consumption can co-exist speaks volumes about the future,” said Rob Wells, Universal Music Group’s president, global digital business.  “In fact, we have really only scratched the surface of digital music in the last decade – now we are starting the real mining, and on a global scale.” Wells recently came out in defense of streaming services, calling the opposing opinion that they “cannibalize” sales “bogus.”

Digital music services are now present in 58 countries, more than double the 23 markets at the start of 2011.  This was driven, in part, by iTunes’ expansion in 28 new markets in 2011, including all members of the European Union and 16 countries in Latin America.  There are now around 500 legitimate music services worldwide offering up to 20 million tracks.

Still, piracy remains an ongoing problem for the industry.  It is reported that more than a quarter (28 percent) of global Internet users access unauthorized services on a monthly basis, with half of them using peer-to-peer (P2P) networks.  “The truth is that record companies are building a successful digital music business in spite of the environment in which they operate, not because of it,” said Frances Moore, IFPI’s chief executive.  “The 8 percent figure should be much higher.  That’s part of our task in 2012.”

Despite the challenges, there are glimmers of hope on the horizon.  The IFPI congratulated several countries on their efforts to crack down on illegal file sharing.  France’s Hadopi “laws” were noted as having a significant impact on piracy.  There seems to be good indication that this graduated response law, whereby a criminal court has the power to suspend an internet account for up to a month and impose a fine of €1,500 (about $1,930) if an individual is found guilty of repeat copyright infringement, has had an impact on piracy in its first year of operation.  More than 700,000 Hadopi notices have been sent since October 2010.  In that same period, P2P piracy levels in France fell by 26 percent, with approximately 2 million P2P users stopping their use of unlicensed services.  Moreover, single-track sales have increased by 48 percent and album sales have increased by 67 percent.

In the United States, the group said most major American Internet service providers had signed up to a “copyright alert system” aimed at issuing similar warnings to suspected file sharers.  Since the file-sharing service LimeWire was shutdown, the number of Internet users using P2P services has fallen from 16 percent to 9 percent.

The fight against copyright infringement has seen some high-profile reverses, as well.  In particular, last week’s shelving of the Stop Internet Piracy Act (SOPA) in the U.S., which was originally intended to block access to pirate websites, dealt a major blow to the music industry.   Both SOPA and the Protect Intellectual Property Act (PIPA) were met with a wave of opposition from top websites, including Google and Wikipedia, as well as the Internet community at large.

Moore described the demise of SOPA and PIPA as a setback, saying that the technology community “has come out a bit hysterical against this.”  Still, she said the IFPI would continue its international lobbying efforts for website-blocking, maintaining that the measure was “efficient, effective, and proportionate.”  She also called for search engines, such as Google, to do more in the fight against piracy, such as removing restrictions on the number of takedown notices for non-legal content that rights holders can notify and favoring legal music sites over P2P links in their search listings.

Despite the concerns over piracy, the digital music report found that 32 percent of the record labels’ global revenue now comes from digital sales, an all-time high for the music industry.

Download the entire IFPI report here.

Kyle Mammarella is a New York based artist manager and music enthusiast.