For Erik Huggers the giant signs outside his office building are a grating reminder of what he’s up against. The Market Street tower in San Francisco advertises its other illustrious startup tenants, Uber and Square. But Vevo, whose sprawling offices offer 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 platform 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 for the mobile era what MTV did for TV: be the premium destination for music videos from popular and up-and-coming artists. Already many of the videos it distributes–on Vevo-branded channels on YouTube 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 YouTube channel, is the site’s third most popular. And that’s precisely 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 register the white Vevo logo on the bottom 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 negotiations 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 create 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.