Record Companies Cautious With Boom In Video Outlets

NEW YORK‹The good news for the U.S. music video industry is that there are now more outlets to show videoclips than ever before, thanks to digital spinoff channels from national networks and the small but growing number of music video sites on the World Wide Web. The bad news is that record companies have largely been reluctant to invest in making more videos overall just because there are more outlets available.
"The problem is that no one seems to know what kind of impact on record sales these [new outlets] are having," says MCA Records VP of video production Doug Major, summing up the desire among major labels to see some quantifiable evidence of these channels' audience reach and retail effects.
The new outlets include the Suite from MTV and VH1, a digital spinoff channel package launched in August by MTV Networks (Billboard, July 11). The Suite consists of hard rock MTV channel X, Spanish-language MTV channel S, R&B-oriented VH1 channel Soul, VH1 Country, and jazz/AC/new age VH1 channel Smooth. The Suite, which is currently available only in the U.S., includes as its flagship channel the free-form M2, which was launched in 1996.
"Right now, the Suite is in about a few hundred-thousand households and mostly in small markets," says Matt Farber, senior VP of programming enterprises for MTV/VH1 and GM of M2. "1999 is the year in which member system operators will be rolling out digital upgrades in major markets, and we expect to see a dramatic increase in distribution [for the Suite]."
The Box's digital spinoff channels, collectively called the Box Set, were launched last year (Billboard, Dec. 6, 1997) on U.S. cable and satellite systems. The Box Set includes Box Pulse (top 40), Box Urban (R&B), Box Edge (alternative/modern rock), Box Classic (older pop), and the newer Latin music channels Box Exitos and Box Tejano.
"The difference between our spinoff and spinoffs from our competition," says Box president/CEO Alan McGlade, "is that we don't require cable and satellite operators to take all the channels as part of the package. We target these channels to a specific market."
McGlade, like many others who spoke to Billboard, believes that the online and TV worlds are becoming increasingly interrelated and that videos will play an important part in this evolving relationship.
For example, the Box and online entertainment company SonicNet, both of which are owned by TCI Music, have been integrating cross-promotional ties in their music video and online operations.
WEB LINKS
The Box revamped its Web site to include the ability to charge users a fee to request videos, based on the Box's "jukebox TV" format. Videos shown on the Box can also now display the address of an artist's official Web site. McGlade adds, "We'd like to work with record companies to include more artist Web site addresses on videos we show on the Box to make it a more interactive experience." In addition, SonicNet's online videoclip channel, Streamland (www.streamland.com), includes a link to the Box's Web site.
SonicNet president Nicholas Butterworth says, "The difference between Streamland and the Box's Web site is that people can see music videos for free on Streamland." Butterworth and McGlade hint that their companies may merge their Internet activities in the future. "We may want to offer everything in the same place," says Butterworth.
Despite having the clout of SonicNet behind it, Streamland‹like other music video channels on the Web‹finds itself shut out of getting video service from several major record companies. For example, Sony Music Entertainment and the Warner Music Group have policies not to service clips to music video channels on the Web.
MusicVideos.com chief technology officer Peter Gorla acknowledges that getting some labels to take the medium seriously is a major problem. "Record labels should remember that videos are made to sell records, and the labels need to understand how the Web can help their business model."
In addition to Streamland and MusicVideos.com (www.musicvideos.com), other streaming music video channels on the Web include Rolling Stone Network (www.rollingstone.com), Vidnet (www.vidnetusa.com), and InterneTV (www.internetv.com).
Elektra senior director of national video promotion Diane Valensky says, "So far I've seen no real impact with the new video outlets. I'm optimistic that will change, but it's too early to tell. I think the Internet outlets are more viable than the digital spinoff channels because most people with access to the Web can see the Internet music video channels, but most people can't see the digital spinoff channels."
550 Music/Work Group head of video promotion Doug McVehil adds, "The [new video outlets] don't do a whole lot to promote themselves. It's important that they update labels on what their distribution is and how many people are actually getting something out of what they're doing."
MTV Networks has placed ads in trade publications for the Suite, and Box VP of programming Peter Cohen says that the Box will be placing trade ads for the Box Set in the first quarter of 1999.
But even when a new video channel can brag about its content or growing numbers of viewers, the music industry seems to still need quantifiable proof that these channels are effective in selling records.
MCA's Major adds, "The more outlets showing videos the better, but so far these new outlets haven't affected our video production. I think the new video outlets have to find ways to interconnect with the labels. They've got to build the kind of credibility and word-of-mouth that MTV had in its early days. I think the key to that will be to play videos that other people won't play, and that way we can see if playing those videos really does affect record sales."
Columbia Records VP of video production Joanne Gardner also reports that the new outlets have not had an impact on video production: "We're busier now than ever before. That doesn't necessarily mean we're making more videos, but the stakes are higher in music video-making for production quality and getting the videos on MTV. MTV is still considered the main outlet where people want their videos seen, and MTV has less programming slots available to show videos than they did in the early days."
LABEL CHANNELS COMING
Record labels are also making plans to launch their own music video channels on the Web (Billboard, July 25). Those new channels include Sony's forthcoming Video Music Network (www.videomusicnetwork.com) and Atlantic Records' INSTAVID (www.instavid.com), which sources say will be unveiled Thursday (5) at the 1998 Billboard Music Video Conference, which runs Wednesday-Friday (4-6) at the Sheraton Universal in Universal City, Calif.
SonicNet's Butterworth says, "I'm not so sure a Web-based video channel that offers music from only one company is better than one that offers music from a variety of companies. Would consumers want to shop at a music store that has music from only one source? I think the value in Streamland is that we offer variety. Users don't just want control, they want great content."
As for current music video industry leader MTV Networks, Farber hints that MTV has "ambitious plans" to upgrade its Web site but stops short of saying that MTV Online will transform itself into a streaming video channel.
He notes that current technology still makes it "more suitable to watch videos on TV instead of on a computer." But according to MTV Networks chairman/CEO Tom Freston, MTV Online, whose current content is primarily music news, will become a "stand-alone business" in the future (Billboard, Oct. 31).
As for the future of videoclips, MusicVideos.com's Gorla says, "The number of formats to deliver videos will continue to grow. It's going to get more personal‹for example, people having the ability to create their own playlists and program their own videos."
And perhaps the key to any upstart video channel's success will be to forge mutually beneficial partnerships with record labels that go beyond just showing promotional clips. Butterworth says, "We plan to use our enormous database on what our audience is like, so that labels can see what's going on with consumers and understand how to better serve them."