Is Def Jam Pulling Away From YouTube?

Publishers turned off by lack of revenue, ad control

It's impossible to deny that YouTube is the dominant online video platform, but as competitors offer better terms, publishers are considering other partnerships. Def Jam and video platform Playwire, for example, just announced they will produce unique content together. While the music label will keep its music videos and contract with Vevo—and by extension YouTube—it will now create exclusive interviews, concert footage and behind-the-scenes clips for Playwire.

"We're excited to be working with a platform that recognizes the power, influence and global reach of the Def Jam brand," said David Bell, Def Jam Recordings svp, integrated marketing and digital strategy. "Firmly focused on providing new revenue streams, our partnership with Playwire allows us to connect our artists with premium brands through unique digital experiences."

A Def Jam spokesperson said the label sees Playwire as a technology company that has done a great job with owned-and-operated websites. And the label gains a partner with the ability to produce, post and monetize videos. "We're always looking for help to monetize our content," the spokesperson said. Bell added that Def Jam was interested in increasing Web video revenue in general, not just on Playwire.

But it's no secret that YouTube's notoriously stingy revenue split—which industry analysts have pegged at 45/55 in YouTube's favor, with larger publishers able to negotiate better rates—has led some to question the platform.

Larry Cornett, founder of product strategy and design consulting firm Brilliant Forge, said publishers are searching for other options due to the lack of money, compounded by limited control over the ad network and an abundance of competition on the platform.

"There are other video platforms that will take care of you with higher quality, better control, better partnership and better ads," Cornett said.

Playwire’s director of business development Anthony Alexander claimed his company can provide a better revenue share because it only works with established publishers and doesn't have to offset costs for user-generated content. In English-speaking countries, it offers an average $8 to $10 gross CPM for desktop viewers and $14 to $17 gross CPM for mobile.

He added that prices fluctuate depending on demand. For instance, the cost to advertise in South America jumped during the World Cup but settled down to much lower rates after the event. In addition, it allows publishers to track data and receive revenue when the video is embedded on another page. Hypothetically speaking, Alexander said if the Weird Al Tacky music video (which got 10 million views in 72 hours) was on Playwire, it would have grossed almost $100,000 in just three days.

"I do think in terms of creating new fans and getting your content out to the masses, YouTube is a great platform," he said. "But if you are looking for the most effective way to monetize your content, YouTube is not your most effective way." YouTube did not immediately comment.

Adam Mosam, founder of online video marketing and distribution company Pivotshare, pointed out that it's hard to believe serious publishers would completely abandon YouTube because of its marketing power. Still, moving away might provide better financial incentives, a new audience or better content promotion. 

"The most likely scenario would be to have one tier of content or at least previews on YouTube that are used to drive traffic to a separate destination," he said.