Why Google's glad to dance to Vevo's tune

The Web titan's role in helping to build Vevo, the long-awaited music-video service, is yet another peace offering to the content industry.

Google CEO Eric Schmidt celebrated the launch of music-video site Vevo in New York and he doesn't appear worried that his company might be helping create a future YouTube competitor. Greg Sandoval/CNET

NEW YORK--Eric Schmidt's presence at a swanky music industry gathering was an illustration of how far digital technology has come and the power it has amassed.

A decade ago, the film studios and top record companies dismissed Northern Californians as a bunch of bearded dweebs who liked electronics. Five years ago, with illegal-file sharing spinning out of control, the entertainment industry looked on techies with fear and loathing, invaders to be repelled before they made off with the treasure. It wasn't that long ago that some in Hollywood considered Google a "rogue company."

Pfft. That's all in the past. On Tuesday, at a launch party for music-video site Vevo, the Google CEO was an honored guest. Schmidt was seated front and center in an area reserved for music industry titans and major recording stars. He rubbed elbows with singers Shania Twain and Sheryl Crow. He chatted up record producer and label exec Jimmy Iovine. He sat and visited with Doug Morris, CEO and chairman of Universal Music Group, the largest of the four top recording companies, as well as the chiefs of Sony Music Group and EMI.

And why shouldn't they show him some respect? Not only is he at the helm of the most successful advertising company in the world and operating YouTube, the Web's No. 1 video site, but Schmidt is also helping to get Vevo off the ground. Instead of trying to stand in the way of a music-video site that is in many ways breaking away from YouTube, Google is providing the service with technological expertise and allowing it to continue to market to YouTube's massive following.

What's that? Google booked $21 billion in revenue in 2008. How can a company like that be satisfied to play rhythm guitar in someone else's band?

At the Vevo party, Schmidt said Google couldn't be happier with the situation. This is what he's done for over a year now, held out his hand to big newspapers, film studios, TV networks, and book publishers. By taking a backup role in Vevo, Google sends a message that the rogue image is garbage and the company is prepared to go a long way--even give up decision-making power--to help partners grow their businesses. No threat here.

In many entertainment circles, that message may resonate, especially the ones where the digital revolution has laid waste. Some of the celebs at the Vevo launch were only too happy to tell Schmidt and everyone else how badly recorded music has suffered.

"We've come here to mourn the death of an old cash cow that was the music industry," U2's Bono told the audience during his speech.

"Let's hope Vevo can help salvage something that used to be amazing," said singer Mariah Carey.

If you're anti-copyright and this makes you long for the days when Google and YouTube used to wave the Digital Millennium Copyright Act in the faces of Viacom, NBC Universal, and others that demanded YouTube remove unauthorized film and TV clips from its site, well, it's time to move on.

For more than a year, YouTube's strategy has been to strike partnerships with the top studios, record companies, and TV networks.

Doug Morris, Universal Music Group CEO and the man who came up with the idea for Vevo, waits to shake Schmidt's hand at the Vevo launch party. Greg Sandoval/CNET

YouTube has content deals with MGM Studios, Sony Pictures, Lionsgate, CBS (parent company of CNET), and all four of the major recording companies.

What probably drove Google to take a softer stance was competition. There might have been a period a couple of years ago when Google could have easily morphed into a video-on-demand service, offering feature films and TV shows and been all things Web video. But it played hardball and NBC and News Corp. successfully came up with a YouTube alternative : Hulu.

The competition between the companies to obtain premium films and shows has been fierce. After pursuing a deal to get full-length content from Disney, Google saw Disney sign with Hulu. That was a bitter blow . Google isn't used to losing.

At the same time, Netflix has jumped into the fray. The Web's top video-rental service has deals with makers of set-top boxes that enable customers to watch streaming Internet video on their TV sets. Apple has a slice of this market as well.

Meanwhile, Hulu could have tried to woo the music labels away from YouTube. Hulu could try to capitalize on any lingering distrust of Google at the labels. Conspicuously missing from Vevo's launch party was Warner Music Group CEO Edgar Bronfman. A feud between Warner and YouTube led to Warner's content being pulled from the video site for nine months before the companies made up . But Warner has so far declined to join Vevo.

In addition, EMI recently penned a music-licensing deal with Hulu. EMI clips will appear on both Hulu and YouTube.

In his speech introducing Vevo, Universal Music's Morris was generous in his praise of Schmidt and Google. But the former songwriter also raised questions about who he was referring to when he said things such as "the best thing about Vevo is that it's our platform" and "no more middlemen" and "we can experiment with anything and everything we want. We don't have to ask anyone's permission anymore."

 

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