Monday, October 7, 2013

Google and YouTube Plot to Conquer TV and Music Business

Image credit: Getty Images for YouTube
J. Max Robins/Forbes

The announcement of the YouTube Music Awards show is a canny play by parent-Google to extend its reach into a realm that has long-been dominated by broadcast and cable networks. When the YouTube Music Awards debut on November 3, look for success that rivals and may ultimately exceed MTV Video Music Awards that’s had 30 years of twerking marketing power, presenting pop icons from Madonna to Miley. MTV’s VMAs, CBS's Grammys, along with a host of other music award shows strewn all over legacy networks are big businessand YouTube/Google is poised to take a piece of that action.

A glitzy concert award show plays directly to two important constituencies beyond the audience: advertisers and the music industry. “The YouTube Awards make perfect sense as YouTube goes mainstream,” says Dave Morgan, founder of TV ad targeting firm Simulmedia. “YouTube has massive reach with a young audience. It’s a great environment for the music industry to show off what it has to sell.”

The YouTube Music Awards streamed live from New York is loaded with the requisite star power. Eminem, Lady Gaga and Arcade Fire will all be on stage. Adding to its pedigree is creative director Spike Jonz and “Vice,” the ultra-hip content factory often likened to MTV in its raging hormone growth stage. {Ex-MTV/Viacom supremo Tom Freston is big investor and advisor.} More importantly, the YouTube Music Awards have already drawn a blue chip advertiser, Kia. The Korean auto giant has signed on as the exclusive title sponsor of the 90-minute live show.

Major advertisers want and are willing to pay a premium to reach a young, engaged audience. YouTube is staying mum, but ad rates for its award show could easily demand rates 25-50 percent higher than usual fare. While there’s been some softening of video ad rates over the last several months given so much available inventory, music video ad rates have stayed consistently strong on YouTube, according to video ad buying platform TubeMogul.

Launching the YouTube Music Awards is offense programming. “YouTube is the No. 1 search engine in the world for music,” says BTIG media analyst Rich Greenfield. “The YouTube Music Awards are a logical step. We see how original programming helped Netflix increase its traffic.”

A wide-range of competitors want to be the music streaming service of choice, whether it’s Vevo or Vimeo. Recently launched iTunes Radio, Spotify and Pandora, they’re all competition for the ears and hearts of the music audience. Google may have recently invested an estimated $40-$50 million in Vevo to keep the service’s high quality videos coming, but the two are “frienemies,” as GigaOm pointed out. The same day YouTube announced its award show, Vevo touted the launch of a version of its system for Germany, a country where YouTube has run into major regulatory hurdles.

YouTube VP-marketing Danielle Tiedt told Advertising Age the award show is a demonstration of how essential YouTube is to “the music ecosystem” and how it supports “artists.” In addition, the YouTube Awards is an opportunity to promote more of YouTube’s polished content elsewhere on the service to a mass audience.There’s good reason YouTube has opened posh studios in Los Angeles, London and Tokyo and plowed more than $300 million into the coffers of top video talent. Have no doubt, YouTube is taking direct aim at legacy networks. It wants a bigger piece of that audience and revenue pie. That message will be streaming loud and clear on November 3 from Pier 36 on New York’s terminally hip Lower East Side.

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