Vevo’s Rio Caraeff is king of online music videos

If Rio Caraeff had his way, the phrase “I want my MTV” would be replaced by “I want my Vevo.”

The 34-year-old Santa Monica music executive, who once headed the digital music business for Universal Music Group, launched Vevo in December. In April — less than six months later — the site vaulted into the No. 1 spot for online music videos in the U.S., garnering more than 43 million unique viewers who watched 350 million streams, according to ComScore Inc.

Among all video sites, Vevo ranked fourth, just after Google Inc., Yahoo Inc. and Fox Interactive Media, and beating out the likes of Facebook Inc., Microsoft Corp., CBS Interactive and Hulu, a site owned by Walt Disney Co., News Corp. and NBC Universal.

Vevo accomplished this feat with a little help from its friends, namely Sony Corp. and Universal Music Group, which funded the company in April 2009 and supply it with a stream of licensed music videos from signed artists, including Beyonce, Lady Gaga, MGMT and Justin Bieber. It also has a $20-million investment from Abu Dhabi Media Group, which owns a minority stake.

In all, Vevo has about 25,000 music videos from 7,000 artists. That’s roughly 85% of all professionally produced music videos in the U.S.

Vevo also cut a deal with Google to pipe high-definition music videos onto YouTube. In return, YouTube gives priority search results to licensed Vevo videos over those uploaded by individual users.

Caraeff, who works in Santa Monica for the New York-based company, spoke with us about how music companies intend to profit from free videos.

Free is so last year. How are you planning to make money by giving away your videos?

The priority for the business is to create a service to engage every person on the planet who loves music. The best model for that is advertising. I’m not interested in selling music videos to people who are used to getting them for free for 30 years. For the foreseeable future, it’s a sponsorship model. Which is working out very well for us because we have scale. Right now, we have 74 advertisers and sponsors on board.

How’s that working? Are you profitable?

We’re not profitable yet. We’re still making investments in the business. What we have succeeded in doing is restoring the premium luster of music online. We’re selling music ads in excess of $25 [for every 1,000 impressions]. When I was at Universal Music Group, the average rate for music videos was $10 [per 1,000 impressions]. In some cases, it was significantly less than that. Premium TV programming online sells in the $25 to $30 range. We’re establishing this audience as valuable. They’re engaged and they’re passionate, and we’re reaching them at scale. That’s never been done before.

Most TV studios are suspicious of Google and YouTube. Why aren’t you?

TV studios have a very profitable relationship with cable companies and affiliates. They’re protecting a successful business. In the music industry, our video content is largely unmonetized. The advertising revenue we received from music videos prior to Vevo was de minimis. We have nowhere to go but up. That’s completely different from film or TV.

You can argue that Google and the Web in general are not good for old-media businesses. But coming from my industry, where you have a business that is in free fall, you can’t afford not to swim with the tide. From our perspective, working with Google and not against it was the best strategy. It’s also the best strategy for fans. Everybody was going to YouTube. Why would we take our videos off YouTube? We came up with a strategy that embraced YouTube and Google, but in a way that helped us build a viable business.

What’s next?

The Web is going into every hand-held device and every TV. Vevo needs to be in all of those places. We’re shipping our first mobile application at the end of June, starting with the iPhone and moving into other platforms. We want to give fans what they want, where they want it. They can drink from any faucet they want to, but the water will probably come from our well.

Do you see a day when you’ll charge for content?

I want to be very careful charging for things people are not used to paying for. To build a successful business, you need a large audience that comes back time and again. Right now, our audience is very engaged, and there’s a lot of advertiser demand for that. We’re doing very well with our existing business model, so I’m not in a hurry to start charging for content.

alex.pham@latimes.com