YouTube Is Ready for Primetime With Its Music Awards

by Jonathan Berr | October 2, 2013 11:17 am

Does the world need another video music awards show? Google’s (GOOG[1]) YouTube business sure thinks so.

The pioneering video sharing services has announced plans to hold the first YouTube Music Awards on Nov. 3, a 90-minute live-streamed show that will be sponsored by Kia.

According to Advertising Age[2], YouTube will hand out awards in six categories, based on data generated by the site in areas such as shares, views and likes. Fans will be able to vote for their favorite performers as well. The event will be held in New York.

The YouTube Music Awards is a natural part of the site’s evolution as it moves beyond grainy cat videos into more professional content. During last year’s presidential debates, the site gained credibility by co-hosting a series of presidential debates with CNN, and YouTube remains as ambitious as ever.

“Advertisers spend more on YouYube every month,” said David Burch, a spokesman for TubeMogul, a video ad-buying platform, in an interview. “They have invested a lot in original content. I am certain there will be advertiser interest in this show.”

YouTube, which calls itself “the world’s go-to music destination”, is trying to elevate its stars like Lindsey Stirling[3] and CDZA[4] by having them perform with more popular celebrities such as Lady Gaga, Arcade Fire and Eminem. For those of you who don’t know, Stirling had her first taste of fame after making the quarterfinals of America’s Got Talent. She has been dubbed “the hip hop violinist.” And CDZA is a group that creates video experiments featuring virtuoso musicians.

The 2011 wedding of Prince William and Kate Middleton attracted 400 million online viewers, setting a record that the YouTube Music Awards might have difficulty breaking. Nonetheless, Wall Street will be interested in seeing whether the show will go off without serious technical glitches. If so, it could lay the groundwork for YouTube to try more ambitious content that would hopefully attract more advertising dollars.

YouTube is mimicking traditional television networks in ways both large and small as it tries to monetize its huge global audience — equal to 10 Super Bowls each month. For the past few years, the site has joined traditional broadcasters in making pitches at the up-fronts, where shows are previewed for advertisers. Rapper/mogul Jay-Z performed at YouTube’s event last year.

The site has quite a tale to tell. Viewers watch more than 6 billion hours of YouTube content per month, up from about 4 billion last year, according to a recent Wall Street Journal[5] story. But there are a few obstacles ahead. Rising competition from rivals such as Yahoo, AOL and Microsoft has forced YouTube to slash rates on ads seen next to some of its videos, the WSJ says. Though advertisers recognize the site’s enormous reach, some still question its effectiveness.

“Web video revenue growth has been slower than many in the industry expected, causing YouTube to change some of its policies in order to help the video creators generate revenue off of the site.”

As I noted recently, YouTube’s best days lie ahead[6]. Google’s 2006 acquisition of the site for $1.62 billion may rank among the best ever in the history of corporate America. Analysts expect YouTube to sell $20 billion in advertising in 2020, 5 times higher than what it is expected to do this year. If the Music Awards show proves to be a success, you can bet that other events will follow.

The YouTube Music Awards will help the site build its prime time audience, a key priority since that’s when many people look for online entertainment. Video viewing on tablet peaks in primetime: 25.7% of total tablet ad views come during that time range, according to TubeMogul. Android phone viewing follows that trend, though for some reason use of the Apple iPhone doesn’t, possibly because smaller screens make iPhones less optimal for primetime watching.

In the end, YouTube’s awards show could be a watershed moment for the site. If it’s successful,  the show might help vault the site into the same league as television networks and new players such as Netflix and Apple.  It isn’t enough of a reason to buy Google, but it certainly makes the stock attractive to hold over the long term.

 As of this writing Jonathan Berr did not hold a position in any of the aforementioned securities. Follow him on Twitter @jdberr

Endnotes:
  1. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  2. Advertising Age: http://adage.com/article/digital/youtube-host-live-music-awards-show-lady-gaga/244476/
  3. Lindsey Stirling: http://www.youtube.com/user/lindseystomp
  4. CDZA: http://www.youtube.com/user/collectivecadenza
  5. Wall Street Journal: http://online.wsj.com/article/SB10001424127887324582004578457253960478548.html
  6. best days lie ahead: http://investorplace.com/2013/09/youtube-best-days-lie-ahead/

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