@ Vevo Launch: Google's Schmidt: The Music Industry Will Finally Make Money Selling Music Online
The Vevo launch party has been going on for an hour and executives and stars are ready to take the stage. I spoke briefly with Google (NSDQ: GOOG) CEO Eric Schmidt, who told me that Vevo …
Context & Ripple Effects
Vevo goes live tonight with a star-studded launch party, and Google CEO Eric Schmidt is putting his own credibility behind it, telling paidContent the service will finally make selling music online profitable. That is a personal claim from Google's chief, not a routine product announcement — he is staking Google's distribution power on the idea that a licensed, ad-supported video destination can do what downloads never did for the labels.
The framing matters because it positions Vevo not as another music startup but as the industry's answer to years of failed digital monetization, with Google supplying reach and the labels supplying catalog.
First-order effects
- Music labels gain a dedicated, rights-cleared, ad-supported storefront for their video catalogs, with Schmidt explicitly naming Vevo as the revenue mechanism the business has been missing.
- Google converts YouTube's massive music audience into a partner channel for licensed content, adding premium, advertiser-friendly inventory without having to own the rights.
Second-order effects
- Unlicensed or loosely licensed music video sites now compete against a free, label-sanctioned alternative carrying Google's distribution, forcing them to either secure deals or cede the category.
- Advertisers get a brand-safe, professionally programmed environment for music-related spend, which pressures pricing across the messier user-generated video inventory adjacent to it.
Third-order effects
- If the pattern holds, the economics of recorded music migrate from retail sales toward platforms that control distribution and advertising — leaving the labels as content suppliers and the access-layer operator capturing the margin.
- That structure invites closer regulatory and contractual scrutiny of how much of the music business one distributor should intermediate, since a single platform now sits between every artist and their audience.
The trend: Recorded music is shifting from unit sales to ad-supported streaming video, with whoever owns distribution — here Google — positioned to capture the value chain.