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Warner Music Group aligns with MTV Networks in music video ad deal

June 30, 2010 | 11:08 am

Nickelback Warner Music Group hears music in MTV's online advertising network.

The music conglomerate on Wednesday announced a multiyear, nonexclusive deal to let MTV sell the ads for thousands of Warner's online music videos.

The music video business, which MTV pioneered three decades ago but has largely abandoned, has migrated online in recent years to sites such as YouTube, Vevo and on artists' individual home pages. The diaspora, however, has meant that artists and labels have collected very little advertising money from the videos because the clips have been spread far and wide across the Web.

That's now beginning to change. Universal Music Group, Sony and EMI are pursuing one strategy: Combine all the videos to get critical mass though a company called Vevo and charge more for ads.

Warner appears to be charting a different course with its MTV alliance. Instead of pooling the videos into one online destination, Warner wants to keep the stuff on its artists' individual websites. All told, Warner's music videos garnered 26.3 million unique visitors in May, according to comScore, an online tracking firm.

Such an audience can command several million dollars a year in online advertising revenue, a substantial amount when the industry is struggling against massive declines in CD sales. Warner last year outsourced the ad sales for its videos to Outrigger, an independent Internet ad sales company. But advertisers prefer to sign a handful of deals with companies that have access to large audiences, rather than pursue a large number of deals with smaller outfits such as Outrigger.

Warner is hoping that its shift to MTV would allow it to command higher ad rates and sell more ads, using MTV's online advertising sales force. The agreement also gives MTV the option to contract Warner artists to appear on the network's shows or provide licensed music for its TV series.

If things don't work out with MTV, Warner maintains the option to go elsewhere, including Vevo, according to an executive familiar with the discussions.

-- Alex Pham

twitter.com/alexpham

Photo: Warner Music Group represents a number of groups, including the Canadian metal band Nickelback. Credit: Chapman Baehler.
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