What the majors want from the video hub, what he learned from MySpace – and why mobile is more than just phones
There are very few surviving pictures of Nic Jones, now Vevo’s senior vice-president of international, wearing short shorts and playing his trombone, but being brought up by his parents in the Salvation Army tradition was, he says, what inspired his love of music.
There are very few surviving pictures of Nic Jones, now Vevo‘s senior vice-president of international, wearing short shorts and playing his trombone, but being brought up by his parents in the Salvation Army tradition was, he says, what inspired his love of music. “It was all bloody James Last in our house,” he adds in a very loud, excitable voice, going on to explain that it wasn’t long before he rebelled and immersed himself in the world of David Bowie, all the way to Aladdin Sane.
This passion played a significant part in his recruitment by Vevo, which calls itself “the world’s leading music video and entertainment platform”; he bonded with its chief executive Rio Caraeff, like him an Arcade Fire fan, over live music, and was given the task of overseeing its global strategy.
Jones was born in the UK but spent 25 years in Australia. There’s only a faint twang of an antipodean accent, but what’s less obvious is the Australian attitude he has picked up. “It has changed the way I do business,” he says. “Coming back made me realise that people here are very closed, but it’s OK to ask questions and to say what you think. I’m much more direct and outspoken than I was.”
For many users, the name Vevo has become synonymous with YouTube, though the two projects are independent and work on a non-exclusive partnership basis. That partnership is both a blessing and a curse for Vevo, says Jones. Vevo’s success on YouTube provides some powerful lessons: a coherent, curated community of content around a strong brand has made the most of YouTube’s scale, but built a far more compelling experience for users. “It’s fantastic for viewers, but how do you build a brand on YouTube? There’s an element of duration and care around what you develop, and that’s what draws people in,” he says. When Kasabian played the O2 on New Year’s Eve it was broadcast live on Vevo – but the viewing figures showed six times as many people had viewed on Vevo than on YouTube. Jones argues this is proof that users really do want that curated environment.
Vevo was launched in February 2005, offering music from artists on the record labels Universal, Sony Music and EMI; Warner Music, however, chose to partner with MTV on a rival service. Vevo is owned by Universal and Sony along with E1 Entertainment and the Abu Dhabi Media Company. Jones rejects the comparison to MTV yet the business model is identical: Vevo takes content from the labels, monetises with video ads on distribution networks such as YouTube, and shares what’s left with the rights holders. The company won’t share revenue figures, but says it has returned $200m to rights holders since launch. “Vevo is at the pointy end of what the labels want to do, right at the heart of the music connecting with the fan,” says Jones. “The labels wanted to be proactive and take control. We have a good relationship with them – in fact when we’re not live in a country, we have them on our backs wanting to launch.” The proposition for brands is just as strong, he argues. “This is not just about targeting socioeconomic groups – this is people in their 20s who are way more engaged with music than anything else, and that’s a very rich seam to mine.”
Jones cites the ITV drama Broadchurch, with 9 million viewers watching its finale, as an example of an engaging TV format – but points out that music has that level of engagement “day in, day out” and is a rich opportunity for advertisers. It’s an opportunity for which brands have an increasing appetite. Earlier this month, Toyota Aygo signed a year-long, seven-figure deal with Vevo, its first sponsor following the car maker’s deal with Channel 4’s T4 which ended last year.
Jones can’t evangelise enough about mobile, while identifying misconceptions around what “mobile usage” means. For the first time, Vevo clocked 51% of its users on mobile devices in the US in April. The typical figure is 25%, but the medium’s astonishing rise is fast making it the priority for all publishers. Jones is quick to point out that mobile doesn’t necessarily mean phones, and doesn’t necessarily mean outside. Up to 87% of content viewed on phones is in the home, and 50% of tablets are only used in the home. This is about wireless devices and watching behaviour – habits that content needs to keep up with. “I envisage a day,” he says, “when we launch a new territory that will only be on mobile.”
For the labels, it’s essential to have a legitimate, controllable service in such a hard-to-predict, hard-to-monetise market, and that may be more of a priority than generating revenues online – for now. Is Vevo, then, something of a loss leader? “Absolutely not. What they really want to do is sell music,” asserts Jones. So do they see Vevo as a marketing platform, or distribution? “We don’t use either phrase, but we are moving to an access-led community rather than an ownership model.” He points to research in the US indicating that teens now use Vevo, Spotify and Pandora to test out music before buying downloads or even physical CDs – the opposite of trying clothes on in-store and then buying more cheaply online.
Before joining the music video site, Jones had spent 16 years being the digital guy in largely non-digital organisations. On a trip to California in 1996, he had a chance encounter with the internet and came back fired up: “I told them that there was this thing called the internet and that it was going to change everything, and they just weren’t so sure. So I left.”
Eventually he landed a role at News Corporation in 2003 as managing director for News Interactive. The strategy was to buy complementary businesses around classifieds, and as three of those – realestate.com.au, seek.com.au and carsales.com.au – are all public companies valued at more than $2.5bn, Jones is keen to point out his part in that success, and says the common thread is the recognition that technology needs to underpin and inform what a publisher does. Jones found himself on the periphery of News Corp when the infamous $580m MySpace deal went through. “Even on the digital teams we were overwhelmed by the idea. Some of us thought it was a bad move, but the users grew from 28 million to 132 million in the first year, so what did I know? It was a very smart thing to do, but they never realised how difficult it would be to manage a business like this in a company as hierarchical and traditional as News Corp. They saw the opportunity, but didn’t see the difficulty of managing it and integrating into the business.”
When Jones joined Vevo in 2011 after four years in advertising, how did he decide which countries to prioritise? “Western Europe, Brazil, Australia and New Zealand – you could come up with the same list. And you’d also look longingly at Asia but it’s too complex, so we go for the low-hanging fruit,” he said.
“Markets strong in live music are always good indicators, as are video views provided they are backed up with mature digital agencies and mobile penetration. I learn from [the mistakes of] MySpace – you don’t just put an office in every country as quickly as you can, and you don’t hire too many people.”
Where the Web 2.0 approach used to be to build audience and work out the business model later, there’s now a more measured approach that demands a balance between audience and potential revenue. Mexico, for example, has 30m monthly views but the state of the rest of the market would make that hard to monetise. In Australia and New Zealand, the channel launched in partnership with MCM Media in April 2012 and already had 40m views between 5 million users each month – now it has 80m views and 8 million users and a mature digital market that is making money.
Vevo has rolled out more local versions in Canada, the UK and Ireland, South Africa, in France, Spain and Italy with sales partner Yahoo, and recently the Netherlands and Poland, though there’s a notable lack of progress in Germany where YouTube also doesn’t publish music owing to protracted wrangling over rights. There have been no music videos on YouTube since March 2009, when negotiations broke down between YouTube’s parent company Google and Gema, the German authors’ rights society.
Ultimately Vevo is a means to an end, and can only be part of a larger ecosystem of music promotion and revenues. “Vevo is successful if lots of advertisers want to advertise around the videos – that’s good for the labels. And if people buy downloads, that’s good, or if they go into a shop and buy a CD, or they pay to see a live band.”
Meanwhile, Jones wants Vevo to be in the living room, the music-sharing tool of choice for shared entertainment between friends, flatmates and families. There will also be UK Vevo TV, once the US version is ready, so that everything is available at once. What’s not going to happen is that US or UK Vevo is imposed on Vevo Poland – every territory gets local TV, he says.
There will be more original content – Kasabian’s gig at an aerodrome in 2011 was a big hit for Vevo, as was the Maccabees video made with a thermal imaging camera.
For now, though, Jones has more immediate problems, working out how to promote the music video site in Poland. Apparently there’s no Polish word for video. That might be a problem now, but no doubt video will have been trumped by some new sensation-centric medium a few years from now. Maybe there will be a new word in Polish for that.
“I made the leap of faith to digital 16 years ago, and I’ve learnt there’s no point predicting what’s going to happen. Like Bill Gates said, we always overestimate the short-term change and underestimate the long-term change.”