Online video sites embrace live concert streams

The visceral experience of attending a concert can never be fully replicated online. But live music is making its way to the Internet with increasing frequency, bringing with it new opportunities for fans, artists and rights-holders alike.

Online outlets have begun dabbling in hosting live video streams of music concerts. YouTube has done so with U2, Alicia Keys and, most recently, with performances by the Dave Matthews Band, Norah Jones and other acts at this year's Bonnaroo festival. MTV has aired live performances by such acts as the Gorillaz, Honor Society and Just Kait. Vevo, which featured a live stream in May of a concert by the National, just completed a live webcast of the FIFA World Cup Kick-Off Celebration Concert on Thursday (June 10) in South Africa. And live video sites like Ustream, Justin.tv, Livestream and Big Live have formed to make a real business out of hosting live streams.

At first glance, it seems like a counterintuitive effort. The internet, after all, is a bastion of on-demand access to entertainment content, challenging the appointment-based nature of traditional TV viewing. So why bring that same appointment-based model to an on-demand format like the Web?

According to Vevo CEO Rio Caraeff, the answer is simple: money. Vevo's model is built around creating scarcity and selling advertising against that. The first step was to create one point of access for any music videos on the Web, allowing Vevo to be the sole entity selling ads around them.

Live events are even more scarce, which Caraeff says opens the door to different types of advertising opportunities, like movie trailer premieres. These ads cost more than other Vevo ads because the sponsor is able to place advertising in the promotional run-up to the event, around the live event itself and on the archived footage made available to stream after the event. There's already huge demand from consumer brands keen on reaching the online video audience.

"A lot of the sponsors we're working with today are asking us for more live events," Caraeff says. "Did I think we would be doing this live event strategy so soon? Not exactly. I thought we'd be getting into this at the end of our first year, not in the first one or two quarters of our business. So it's something we've moved up in our road map because we see incredible demand from the advertising marketplace for more events."

Augmenting this scarcity benefit is the issue of audience engagement. Streaming music is by and large a passive activity, which is why video has emerged as the go-to model for ad-supported music online. Watching a video provides more opportunities for interacting with an audience than an audio stream.

Live-streaming services like Ustream and the just-launched Big Live are adding interactive features like chat and sharing to their sites. Big Live is a social networking site that streams live music performances, mostly by undiscovered acts, as a sort of icebreaker to stimulate discussion. Once logged on, users can see what concerts their friends are watching and choose to join the stream, enabling both private and public chats along the way that the founders hope will keep users watching the entire set. Ustream integrates Twitter feeds and Facebook updates on its site for much the same purpose.

An engaged viewer is a valuable viewer, and savvy online services can sell ads around these users, generating revenue that it shares with the artists involved. Ustream shares all ad revenue with artists 50/50. Vevo also provides participating artists with a share of the sponsorship dollars above and beyond the simple per-stream royalties.

The downside, however, is cost. It's far more expensive to stream a live video to 10,000 simultaneous viewers than it is to stream an archived video to 100,000 viewers accessing it at different times. These costs can vary widely based on how each service manages its bandwidth costs, the quality of the stream provided, server maintenance and other factors.

Ultimately, the success of this effort depends on the number of eyeballs it attracts. Vevo won't disclose how many viewers its live events have garnered, but YouTube estimated that more than 10 million tuned in to its U2 concert last year. When Shakira premiered her video "Give It Up to Me" on Ustream last November, the company says it drew about 94,000 viewers.