Viral Music Videos Are Source for Sponsorships, Not Direct Revenue

OK Go sets industry model for monetizing clips

ok go
Jeff Kravitz/FilmMagic
OK Go performs during the Outside Lands Music Festival in San Francisco.
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Not many artists can say that they've had a music video premiere during the Super Bowl. All OK Go had to do was try to sell a car.

The Chicago band's latest video for "Needing/Getting" aired as part of Chevrolet's ad spot during this month's Super Bowl. Since then, the video has racked up almost 16 million views on YouTube. It's not an unprecedented move for the band: OK Go became the music industry's poster children for viral videos shortly after their simple "treadmill video" for their song "Here It Goes Again." Last week, the band's manager, Jamie Kitman, revealed that millions of online views trickle down to a lot less in real change and questioned the deal between record labels and VEVO.

"I would say that 'trickle' is the operative word in terms of revenue we receive from places like YouTube and VEVO," Kitman said during SF MusicTech Summit. "The revenue is so small based on how many streams we've done that I would say it's not a business model, it's like finding change on the street."

Referring to Chevy's paid product placement in OK Go's video, Kitman went on to say that creative, viral videos attract the type of corporate sponsorship that will give you "a million dollars to do something insane."

After VEVO announced making $150 million in ad revenue in 2011, critics have been inquiring as to where all that money goes, since even YouTube phenomenons such as OK Go aren't seeing a dime.

Matt Pincus, CEO of Songs Music Publishing, independent publisher of songwriters including Pharrell and Sleigh Bells, expressed his concern over getting systematically jilted by VEVO in an op-ed for The Wrap. Pincus wrote of the "inherent flawed" approach to the deal drafted by record labels, as it directly affects independent song publishers.

"Major record companies have warranted that they have the right to license songs to VEVO on behalf of publishers… [and] take on the responsibility to pass through an accounting to the publishers, as they do with iTunes track sales," he wrote. "The problem is, the labels don't do that. They simply sit on the money."

In response, VEVO CEO Rio Caraeff removed his company from the equation by telling Digital Music News that VEVO does not play a part in "what happens between an artist and their label or distributor in their contractual relationship." Caraeff also brought up the fact that music videos used to be for promotional use only and that monetizing such content was now a perk, not a promise.

VEVO is currently in negotiations with Facebook to become their official host after the existing contract with YouTube expires this year.

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