• by Ashkan Karbasfrooshan , Op-Ed Contributor, May 2, 2011

In a distant time and in a far-off place, Viacom's MTV was synonymous not just with music videos, but music altogether.  From the network's launch in 1981, it prohibited blatant plugs in music videos.  As a result, it would either blur the logos of the advertiser or outright ask for a clean version devoid of any marketing message.  Yet, when it came to concert sponsorship, commercialism was still prevalent enough to lead Neil Young to release the album "This Note's For You" in the late 1980s, with the title track serving as social commentar.

Online Video Killed the MTV Star?

Of course, times have changed.  For one thing, older artists tend to miss the good old days (just ask Bon Jovi), considering that global sales of recorded music have collapsed from $27.3 billion to $15.9 billion since file-sharing website Napster appeared in 1999.

Furthermore, the last time MTV played an actual music video might as well have been 1999.  While Napster briefly aspired to become the MTV of its generation, the throne was initially usurped by MySpace.  MySpace's musical pedigree and prowess partly explains why News Corp. was so intrigued by it: Rupert Murdoch's media empire was strong in television, movies, publishing and newspapers but lacked not just an online equivalent but also any material assets in music. MySpace was to serve as a springboard into both, and were it not for the various reasons why MySpace fizzled, it very well might have become the MTV of its generation.

Of course, it didn't.  Much the same way that Facebook stole MySpace's social networking thunder, YouTube basically became what Napster and MySpace aspired to be: music for the masses (with Pandora, Spotify etc. being more niche music sites for the most passionate music fans). 

The Rise of YouTube: A promotional and commercial platform.

Indeed, YouTube has become a musical juggernaut: Universal Music Group and SONY BMG are far and away the two largest content partners on YouTube, leading to the creation of Vevo, a so-called "Hulu of music videos," quickly becoming a top-10 property on the strength of YouTube's traffic and Google's infrastructure.

Chances Are No One Cares About Your Stupid Video

Recently YouTube admitted that only 30% of the videos on its site generated 99% of all views. I would guess that apart from the humorous viral variety of clips, music is the single biggest vertical on the site (two of my company's three most popular videos are interviews with Justin Bieber and Lady Gaga, for example).  That statistic is even more extreme than the Pareto principle's yardstick that 20% of a sample will account for 80% of a given behavior.  In this case, what YouTube admitted is that 70% of the videos on YouTube garner a measly 1% of views -- and chances are that includes your videos. (This creates a whole set of challenges for content creators and marketers, but we'll address those on another day.)

A new generation of leaders, a new economic model

Without a doubt, Vevo and YouTube are leading a renaissance in the music video industry, but what the long-term economic model and market size will look like remains to be seen.

According to Vevo's CEO Rio Caraeff: unlike MTV, Vevo aims to enable product placement in videos, which makes sense given that the company "works as a conduit between the world's largest music companies and brand marketers."

Product Placement in Music Videos is Up, While Overall Product Placement is Down

Ironically, while some content creators like the NY Times are scrambling to find additional subscription models to support their advertising supported business models, it's interesting to see an industry that was supported from consumer payments begin to embrace advertising.

In fact, Patrick Quinn, chief executive of research firm PQ Media, reported that product placement in music videos grew from $15 million to $20 million last year;  meanwhile overall paid product placement declined 2.8% to $3.6 billion.

Considering the level of clutter out there, it's plausible that the future of advertising will be integrated, but it's also possible that such advertising will become rejected; some already feel that product placement in music videos has gone too far.

One factor that will probably foster more product placement is the rise of 360 Degree Deals, in which the label gets the lion's share of record sales and a smaller share of touring and merchandising income.  Why stop there?

Of course, most artists understand that concert sponsorships are par for the course, but in-video product placement is a bit sacrilegious.  Grammy award winner Arcade Fire didn't object too much when AMEX offered to livestream and sponsor their Madison Square Garden concert as part of their Unstaged YouTube/Vevo series, but if GM wanted to do product placement for a car in their Ready to Start music video, they might object.  Clearly, there's a difference between the former and the latter. 

In other words, just because some songs lend themselves well to product placement (Def Leppard's "Photograph" is brought to you by Kodak, folks), it would be foolish for the music industry to think that the sky's the limit when it comes to in-music video product placement.

Is Product Placement in Music Videos a Fad or a Trend?

The glass ceiling isn't limited by fan appetite only.  The Lady Gaga video for "Telephone," for example, has been viewed 108 million times on YouTube.  It included product placements from Miracle Whip and Virgin Mobile.  According to Vevo's Caraeff, the latter company has a "strong relationship" with Vevo (which is itself partly owned by Universal Music, the parent of Lady Gaga's label).

What happens if music videos plug brands that don't involve Vevo or its corporate parents?  Does Vevo the disruptor become MTV?  Or, worse, does it start to act like the disrupted?

After all, yes, Lady Gaga's "Telephone" music video was a panacea of product placement, but over time, if every music video serves as a canvas to sell out then fans will not be impressed and turn a blind eye -- not simply by blocking the plugs but by tuning out of music videos altogether. This is something that labels can't allow to happen. 

Author's note: Are there any topics you'd like me to cover in upcoming articles? Please  comment below.