The Preface

Dec. 7 (Bloomberg) — Universal Music Group Chief Doug Morris, head of the world’s biggest record label, is playing ad- man to lure marketers to the Vevo music-video Web site in the latest bid to rebuild the industry.

Morris, 71, has split his time the last few months courting advertisers for Vevo, he said in a Dec. 2 interview. The site will be introduced tomorrow at an event in New York where Mariah Carey, Rihanna and Lady Gaga are scheduled to attend. AT&T Inc., McDonalds Corp. and MasterCard Inc. have agreed to advertise, according to New York-based Vevo.

Vevo, powered by Google Inc.’s YouTube and featuring music videos, concert footage, interviews and original content, allows record labels to attract premium-prices for ads while controlling how music is viewed and distributed online, Morris said. The effort to reverse the industry’s decline may be Morris’s final salvo as he prepares to hand over the reins at Universal to international music head Lucian Grainge.

“The music business has been taken advantage of for years,” said Morris. “This is our opportunity with Vevo to take back control of our product.”

Vevo is co-owned by Vivendi SA’s Universal Music, Sony Corp. and the Abu Dhabi Media Co. Terra Firma Partners Ltd.’s London-based EMI Group Ltd., the label of Norah Jones and Coldplay, will provide material as part of a licensing accord announced today. Negotiations to add material from Warner Music Group Corp. are ongoing, people familiar with the matter said.

Record companies are trying to capture the growth in online ads and offset an almost 50 percent decline in U.S. album sales from 2000 to 2008, as measured by Nielsen SoundScan. Global ad spending for online videos is projected to more than triple to $7.6 billion by 2012, according to New York-based researcher eMarketer.

YouTube

YouTube, which generates more than 1 billion views per day, is projected by Credit Suisse to lose $470 million in 2009. The company sees Vevo as a way to expand beyond advertising by licensing its software, said Chris Maxcy, director of content partnerships at YouTube.

“We do think it’s going to be a good business opportunity,” Maxcy said.

Universal Music’s revenue fell 5.2 percent to $2.78 billion in the 9 months through September, even as digital sales surged 21 percent. At Edgar Bronfman Jr.’s publicly traded Warner Music, digital sales grew 10 percent for the year ended in September while overall revenue fell 9 percent.

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The VEVO Machine is on the move!!!