Music video streaming service Vevo has recorded 30 percent growth in revenues over 2017, and says it is nearing profitability. The company broke even for the first time with turnover reaching $650 million this year, up from $500 million in 2016 according to the Financial Times. As online music streaming continues to boom, Vevo is committed to making its ad supported model work, and appears to be on the cusp of doing so.
The results come after a year in which Vevo, largely known for hosting music videos on YouTube though it does run its own website too, achieved some major milestones. The music video for this summer’s earworm ‘Despacito’ became the first video on YouTube to reach four billion views, and Vevo claimed that 43 percent of YouTube’s audience in the US and UK now watched its content this October.
CEO Erik Huggers announced last month that he plans to step down from his role, but he is leaving the company in strong shape for his successor. Under his watch, the company moved into production of original content, and reworked its apps and website, all of which appears to have paid dividends. Huggers’ long term vision, however, was for Vevo to transition to a subscription model, a plan which has now been scrapped.
For now, Vevo’s ad supported model seems to be working. The company, which is a joint venture by Universal Music Group, Sony Music Entertainment and Warner Music Group, was founded as a way for record labels to monetise growing demand for music videos online, and while music streaming services have struggled to cover licensing costs with ad sales or subscription fees, Vevo may have found a model that works.
The company has not even been hurt by the brand safety scandals which hit YouTube this year. In fact, Vevo says it was buoyed by YouTube’s troubles, as advertisers pulled ad spend from YouTube and poured it directly into Vevo instead.
There could be trouble on the horizon though, as Facebook and YouTube itself make moves to build their own music streaming services. YouTube plans to launch a music streaming subscription service this year, Facebook has also signed a licensing deal with Universal, and hinted at ambitions for its own music streaming platform. But given that Vevo’s owners also host the majority of the music that Facebook and YouTube want to license, they will have significant power to reach agreements which don’t cannibalise their own offering.
Kevin McGurn, chief sales officer at Vevo, spoke to VAN at last year’s TV Rise event about the company’s strategies, detailing how it has diversified its portfolio of mobile, desktop and OTT apps, and how the company has used OTT to drive further growth.