Universal Music Group sells more CDs than any other company in the world, but these days that distinction is worth less and less. So CEO is Doug Morris is doing whatever he can to leverage UMG’s market clout into other revenue streams. Next up: An attempt to create a standalone video site.
Does that sort of sound like Hulu to you? Someone at Universal thinks it does: Both CNET and Billboard reference the NBC/Fox JV when discussing the to-be-named site, which we hear won’t launch until next year at the earliest.
And there are some obvious parallels. Quietly, video has actually become a big business for Universal: Internally, the company projects that it may generate $100 million from video this year, with the majority of that coming from digital — which means the majority of its video dollars come from YouTube. But Universal also figures it could generate even more money if it was selling videos on a carefully curated site, without the copyright issues that scare away advertisers from the likes of YouTube. And, like Hulu, a destination video site could give Universal more leverage when negotiating with YouTube. We hear rumblings that the current relationship between the two companies is a bit frosty, anyway.
There are some big differences, though:
- Hulu is an actual JV, run separately from the companies that are funding it. This gives the site flexibility in operations, and in deal-making: It’s easier to get outsiders like Viacom to show their stuff on Hulu than it would be on, say, NBC.com. But Universal is planning on running this in-house, at least to start with. It’ll be a lot harder to convince EMI, Sony or Warner to contribute their stuff to the site. And while Universal is the biggest player on the block, a video site that only has one label’s videos isn’t that compelling.
- More important: The stuff on Hulu — full length television shows and movies — are still relatively rare on the Web. There just aren’t many places where you can stream episodes of “The Office”, etc. But you can get video clips just about anywhere. Just ask Yahoo Music, which used to generate 300 million video views a month a few years ago, and now streams a third of that. So the draw here — both for viewers and advertisers — won’t be as compelling as Hulu’s offering.
That said, nothing wrong here with Universal trying to milk additional dollars out of something that was previously just a marketing expense. Though we do wonder what happened to UMG’s last attempt to do this, via something called International Music Feed. And while we’re asking questions: Does UMG get money when people watch this oldie-but-goodie?
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