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Music videos resurrected by online, phone delivery

Posted by iNext - 2005-11-05

Music videos were stifled by the downloading that crippled record companies, but they have found new life in the past year on the Internet, mobile phones and DVDs, and are helping rescue the ailing music industry.
Once considered nothing more than a costly marketing tool to help sell albums, videos by the likes of Madonna and Kanye West are now bringing in cash on their own as fans stream them by the millions while watching accompanying online ads, and pay to download them onto phones and Apple's new iPods.

Music companies are not saying just how they are being compensated for them or how much, but they acknowledge that the revenue will help videos pay for themselves for the first time.

"In a not particularly exuberant environment, this is one area of growth we're capitalizing on," said Thomas Hesse, president of the global digital business for Sony BMG Music Entertainment, the world's second-largest recorded music company.

"I think we're seeing quite a fundamental paradigm shift in the way videos are being used," he added. "We're much more confident about ways to monetise them."

Though once exclusively the purview of MTV, which is hosting its annual Europe Music Awards in Lisbon on Thursday, videos have spread far and wide as consumer habits have changed.


Yahoo Inc. says its users watch 350 million music videos a month -- about 50 million in Europe and the rest in the United States -- and, with its Internet rivals, it is chasing the same advertisers who have been MTV mainstays for 25 years.

"The kids have already decided they're going to watch videos through us," said David Goldberg, the vice president and general manager of music for Yahoo.

"The advertisers have not come around to that yet, but we've been able to show that our videos are consumed more than the ones MTV shows on television," he said.

But MTV, a unit of Viacom Inc., is far from giving up on videos even though it has diversified its programming with original shows like Laguna Beach and Pimp My Ride.

It streams millions of videos on Web sites, and continues to launch new music video channels around the world. The presence of such top-selling recording artists as Coldplay and Green Day at the awards show in Lisbon proves MTV's continuing significance in the market, network officials said.

"We always hear Yahoo wants to be the MTV for the digital world," said Bill Roedy, president of MTV Networks International. "We're not about to give up this franchise. We are the MTV of the digital world."

While American teenagers have migrated online to watch music videos with the rapid uptake of high-speed Internet, in Europe it is the new third-generation mobile service known as 3G that is the catalyst.

Britain's 3 network, for one, says customers have downloaded 15 million of them over the past year.

DVDs also accounted for $2.6 billion, or 8 percent of total music sales last year -- double the percentage in 2002 -- because of the appetite for video content related to recording artists.

The resurrection of music videos has been relatively quick after rampant cost-cutting by record companies sent the industry into a tailspin. Many labels started capping the amount spent per video, leaving producers unsure of their viability.

"This time last year, people were talking about pulling out of making videos because the margins were tiny," said Stephen Davies, head of legal and business affairs for the British Music Video Producers Association. "We really had a crisis view about where the industry was going."

Though it is off the death watch, the rejuvenated world of music videos is bringing a new set of problems.

Some in the music industry are already grumbling that Apple is charging too much -- $1.99 in the United States and 1.79 pounds in Britain -- for its fledgling music video service, and songwriters are clamoring for bigger fees now that the medium is evolving into a profitable venture.

A group of U.S. music video makers also is quietly seeking signatures online in hopes of recruiting Hollywood film directors to take up their cause with the music industry.

"Music video directors, who conceive, write and direct these works, enjoy no creative rights, receive no ongoing financial benefit from the sale of our work, and many times are not even credited," reads a letter by the anonymous group to Directors' Guild of America President Michael Apted.

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