Despite much speculation in recent months, Vevo won’t be taking its music videos away from YouTube. The two companies have renewed their distribution deal, meaning YouTube has fended off interest from the likes of Facebook in replacing it as Vevo’s main partner.
The deal also sees YouTube taking a reported 7% stake in Vevo for around $40m. “We made an investment in Vevo. We are excited by their future prospects and to provide YouTube users with the best possible music experience,” explains YouTube’s to-the-point statement.
The two companies’ existing distribution deal expired in December 2012, but has been extended temporarily since then while they negotiated the new agreement.$40m for 7% of Vevo would value the company at around $570m. The terms of the new deal haven’t been announced, but key to them will be how Vevo’s ad revenues are shared. Earlier this year, reports suggested that a new deal would see YouTube taking a third of Vevo ad revenues, and rightsholders half.
The negotiations would have been hardball: witness last year’s public comments by Sony Music boss Doug Morris. “Google is charging us a lot of money to put our videos on their platform, and we would like them to reduce their fees. If not, there are at least three other companies who want to take our videos. YouTube has been good partners. They’re just extracting too much money for the enterprise to work properly.” (Bulletin, 13-Jul-12).
Is the upheaval now over for Vevo? Possibly not.
Attention will now turn to separate speculation that media firm Guggenheim Digital Media is hoping to take a major stake in Vevo’s business, although as the Financial Times points out, that will now involve negotiating with YouTube as well as two major labels and the Abu Dhabi Media Company. Yet Guggenheim is also thought to be bidding for another online video service, TV and film-focused Hulu.