Record labels are currently experiencing the lowest profits seen in decades. The problem, according to the recording industry, is digital music with lower profit margins and pirates. One place that the music industry is looking to improve profits is by monetizing music videos.
The music video is typically a sort of advertising method for the album the song is from. Universal Music Group (UMG) has decided that it intends to attempt to monetize the music videos by launching its own site similar to YouTube and Hulu.
According to UMG, it knows that the audience for a site like the one it plans is there. The company currently licenses its music videos to YouTube for play online. One of its artists -- Avril Lavigne -- has the most watched video of all time on YouTube for her song “Girlfriend”. UMG's YouTube channel is also the most watched on YouTube generating 2.6 billion views over the last year.
UMG plans to launch its own site for its artists’ music videos so it can more closely control the video content and get advertisers more comfortable with paying for marketing alongside the videos. The issue with YouTube has several facets. One of them is the overall poor quality of video on YouTube; the second issue is that much of YouTube's content is user generated and advertisers aren’t comfortable putting their brands alongside the user generated content.
By running its own video site sans user generated content, UMG hopes to be able to monetize 100% of its music videos. NBC Universal's Hulu is able to monetize all of its content thanks to professionally filmed video and TV shows.
If UMG can do the same thing with its own site for music videos, it could be a sign of things to come for all record labels that are looking for any way to improve profits.