58 | FORBES ASIA NOVEMBER 2016

F

or Erik Huggers the giant signs outside his oice

building are a grating reminder of what he’s up

against. The Market Street tower in San Francis-

co advertises its other illustrious startup tenants,

Uber and Square. But Vevo, whose sprawling

oices ofer sweeping views of the city from the 21st floor,

doesn’t rate a mention. Huggers believes Vevo deserves a

spot among the marquee names of the digital era. After all, its

music videos are watched by millions of fans every day. But

the Vevo brand languishes in obscurity. And as CEO, Huggers

is on a mission to transform his company from YouTube’s

underappreciated business partner into a top streaming plat-

form in its own right.

Vevo, the majority of which is owned by Universal Music

Group and Sony Music Entertainment, two of the “big three”

music labels, is trying to do in the mobile era what MTV did

in the TV era: become the premium destination for music

videos from popular and up-and-coming artists. Already

many of the videos it distributes—on Vevo-branded YouTube

channels and also on Vevo.com—are among the most popular

anywhere. “Hello,” by Adele, for example, has been viewed 1.7

billion times on YouTube, making it the sixth-most-watched

video ever on that site. JustinBieberVEVO, the artist’s You-

Tube channel, is the site’s third most popular. And that’s pre-

cisely the challenge. Most viewing of Vevo clips takes place

on YouTube, not on Vevo.com or the company’s mobile app,

and music fans barely notice the white Vevo logo on the bot-

tom right corner of the screen.

Huggers wants to change that and lure more music fans

to Vevo itself. But stepping out of YouTube’s shadow will be

challenging. Vevo was born in 2009 out of the tense negotia-

tions between Google-owned YouTube and the music labels,

which were unhappy with the dollars they were getting

from YouTube. The labels, leveraging their massive catalogs,

pressured Google into a new deal: The two sides would cre-

ate Vevo as both a stand-alone site and a provider of artist-

specific channels on YouTube. “The record labels said, ‘Let

us launch Vevo, or else,’ ” says Mark Mulligan, an analyst at

MIDiA Research. Google and Abu Dhabi Media ended up

with minority stakes.

The alliance has been fruitful. Huggers tells FORBES that

Vevo anticipates $500 million in revenue this year, much of

it from its ad-revenue-sharing deal with YouTube. (That’s

roughly half of Pandora’s 2015 revenue and about a quarter of

Spotify’s.) An average of 25 million people watch a Vevo video

each day on its own site or on YouTube. That not only makes

Vevo a major player in digital music but also puts its audience

on par with that of a top-five cable-TV channel.

Huggers, a 43-year-old with a lanky build and Bradley

Cooper hair, was brought on as CEO in April 2015 to push the

business further. By shifting even a fraction of the YouTube

audience onto its own site and app, Vevo could collect far

more ad revenue, given that YouTube keeps a large portion—

neither side will say exactly how much—of what it makes

from clips played on its site. “Today Vevo is just a watermark,”

he says. His dream is to turn it into a youth lifestyle brand.

Working with more than 325 employees in New York City,

San Francisco and other cities, Huggers, the former head of

Intel’s media division, has made strides. In July Vevo released

a slick redesign of its website and app aimed squarely at at-

tracting YouTube viewers. Now when you open Vevo on your

computer or phone, a video launches immediately, an experi-

ence much like radio, where music is playing when you turn

it on. As with many streaming services, you can create your

own playlists or follow those of others and see suggestions for

artists you might like based on your viewing history. Huggers

says the Vevo app is a place where people can find the best

music and won’t “stumble upon videos about how to feed a

girafe,” as they might on YouTube.

Huggers scored a coup in August when Warner Music

Group, the other big-three label, finally agreed to distribute

its content through Vevo, plugging a major hole in its catalog.

(Warner still has a separate distribution deal with YouTube.)

Vevo’s cry for attention is well-timed. Spending on digital

Stepping Out of

YouTube’s Shadow

BY SHELBY CARPENTER

Erik Huggers wants to make Vevo the top destination for online music videos.

First he needs to outsmart the king of digital video.

TECHNOLOGY