The music service was not created to serve a new need for consumers. Rather, it was built to help advertisers and content owners (including labels, artists, and music publishers) capitalize on music videos, and to help Google (YouTube’s owner) offload some of the cost associated with administering rights to them. In other words, this isn’t a business-to-consumer play, it’s more of a business-to-business arrangement.
Vevo is meant to provide an online clearinghouse for label-approved music videos–the kind of professionally shot videos that often cost half a million dollars or more and used to form the backbone of MTV. Vevo will be the exclusive distributor of these videos, and will handle all licensing and ad sales, although partner Google is handling the actual video hosting and streaming. In other words, if you’re running a video site and you want to post a video that’s in Vevo’s catalog, Vevo will be your only source. By enforcing scarcity, giving advertisers a central place to buy ads, and controlling the user experience–for example, ensuring that there aren’t many copies of the same video on YouTube–Vevo believes that advertisers will be willing to pay much more to appear next to these videos.
You’re not supposed to go to Vevo.com to see their videos. That content is intended to be embedded elsewhere, including every site that licenses the videos. So Yahoo’s music video site will be “carrying” the content, but not hosting the videos themselves.