SEOUL—Last August, a popular South Korean pop group called Girls' Generation made its first trip to Japan and, to the surprise of its managers, sold out an arena. The secret formula for the debut: a Japanese language song—and some business assistance from YouTube.Weeks ahead of the concert, the group's recording label, SM Entertainment Inc., placed a video of the Japanese-language song on YouTube and allowed fans to copy and re-post it on any website, driving radio requests and online chatter.
It was part of SM's new online video strategy. Last year, instead of hosting its videos itself, it began distributing video of its acts on Google Inc.'s YouTube and using the service's copyright detection technology to block illegally uploaded video and sell ads against its own authorized clips. Its two biggest competitors in South Korea, YG Entertainment and JYP Productions, and about two dozen smaller labels have done the same thing.
SM's chief executive Kim Young-min said the partnership with YouTube saves SM thousands of dollars in monthly costs for maintaining video servers on dozens of Web sites for its acts.But he said the main purpose of working with YouTube is promotional. "Rather than being on each video delivery site in each country, it's much better for us to be on a world-wide channel like YouTube," he said.For Google, convincing labels like SM to work with YouTube is an important part of repairing its still-rocky relationship with many content producers, who have been worried about Google's role in facilitating online piracy or devaluing their content online, among other things.
"It's critical that content owners are well-compensated so they can continue to do what they do," said Shailesh Rao, Google's chief for YouTube in Asia. Google showed SM how it could customize advertising to the local where a viewer is watching, not where the video was uploaded from. A Japanese fan watching an SM artist sees a Japanese ad, while an American sees ads from the U.S.
Mr. Kim said the advertising revenue is "not huge" but it was enough to increase his interest in working with Google and YouTube.The partnership has expanded beyond the Girls' Generation campaign in Japan. Now, SM is looking for new talent via YouTube.
Last month, some of SM's biggest acts, including Girls' Generation and Shinee, made video ads on YouTube for auditions that the record label is holding in places like China, Canada and the U.S.
"Five years ago, if we wanted to launch and promote an artist, we had to follow a traditional path and work with traditional media like TV," Mr. Kim said. "But these days, with the rise of Internet media like YouTube, even before our talent leaves South Korea, a lot of fans have a chance to watch them."
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