Doug Morris, chairman and CEO of Universal Music Group, confirmed that his company is considering a plan to build a Web site to showcase its music videos instead of posting them to YouTube.
Morris, impresario of the largest of the four top recording companies, told Billboard that if the company decides to go ahead, the site would launch in January and would likely partner with another label. But why is he dissatisfied with YouTube?
"With YouTube, the quality (of video) isn't great; it gets low [cost per thousand, or CMP]," Morris, 69, told Billboard. "On the other hand, more professional (services) get a higher CPM. So the idea of us getting tied into a lower CPM isn't a smart thing. Why would you want to be in the middle of music-generated product that doesn't demand high CPMs? I haven't made up my mind completely."
Last month, CNET News broke the story that Universal was working on a Hulu-esque site that would feature videos and other content from the label's artists. Sources familiar with the plan told CNET that Morris had for a long time believed that the company should look at music videos as a revenue generator instead of just a promotional tool. They said he has recently grown dissatisfied with the ad money coming from YouTube and was considering alternatives. It's been well documented that YouTube has struggled to attract premium advertisers and apparently Morris believes his music videos deserve higher rates than what YouTube typically gets.
Asked to respond to Morris' comments, a YouTube spokeswoman issued this statement: "We have great partnerships with major music labels all over the world that understand the benefit of using YouTube as another way to communicate with their fans."
Universal is amid talks to renew its current agreement with YouTube, which brings up the question: is Morris seriously considering a YouTube competitor or is this just a negotiating tactic?
YouTube, the world's largest video-sharing site, attracts about 75 million viewers worldwide each month. How long does Morris think it will take him to attract that many eyeballs? On the other hand, music videos are typically YouTube's most popular clips. Universal's videos have logged more than a billion views.
As for the promotional benefit YouTube is supposed to provide, Morris is skeptical. "We don't look at anything as promotion. Take a look at MTV. It turned out to be a disaster for us. We sold some records, but they built this huge company and we gave them our (music) for nothing, and what did we get?"
Later he said: "At some point we changed our video business from a deficit to a profit because we're getting paid every time someone views one of our videos."
Universal Music makes well over $20 million a year on videos, according to Morris. As for the rest of the interview, the former songwriter said Steve Jobs is the smartest person in music: "We consider him a friend." He also discussed the company's strategy of taking equity stakes in music services, such as MySpace Music: "No one's going to build a business off our backs if I can help it without us being part of it."
On the music industry's policy of suing file sharers, Morris said "People don't like policemen. I understand that. And maybe they're right. But when you see all the stores close and you lose half your employees and you can't sign bands to record them because people are stealing, we do things to try and stop it."