YouTube Is VEVO’s Latest Investor

/ Jul 3, 2013

YouTubeVevo2

YouTube is extending its content partnership with VEVO and is also making an investment in the music video company, according to Billboard. The investment, which Billboard and Financial Times had pegged in the $40-$50 billion range earlier this year, would give Google/YouTube a 7% stake in VEVO.

In a statement, YouTube confirmed the investment: “We made an investment in VEVO. We are excited by their future prospects and to provide YouTube users with the best possible music experience.”

It’s not bad for a partnership that hasn’t always been cordial. Last year, Sony Music Entertainment CEO and VEVO founder Doug Morris had this to say about VEVO’s relationship with YouTube: “Google is charging us a lot of money to put our videos on their platform, and we would like them to reduce their fees.”* He refused to disclose the specifics of VEVO’s revenue-sharing deal with YouTube, though it has since been reported that VEVO gives a third of its revenue to YouTube and over half to music labels. Clearly VEVO wanted to reduce YouTube’s share, which isn’t exactly an uncommon conversation among YouTube creators and media companies these days.

It actually prompted Morris to issue the ultimatum that if YouTube did not comply, there were “at least three other companies” who would take VEVO’s videos. These other companies included Facebook, Apple, and Amazon, according to the LA Times.

Not sure how serious the ultimatum was, considering how important YouTube and VEVO are to each other. Based on comScore numbers, VEVO is consistently YouTube’s top content partner. In May, VEVO reached 50.2 million uniques on YouTube. Fullscreen, which came in second place, reached nearly 36.5 million. On the other hand, as Billboard notes, a significant chunk of VEVO viewers come from YouTube, regardless of all of the other distribution points the music video company is offering.

Nevertheless, the relationship has been frosty at times. That shouldn’t be an issue anymore with YouTube placing an investment in the company.

Terms of the deal have not been disclosed, though Billboard reports that VEVO will use the funds to expand internationally as well as create more original music-related content.

VEVO was a Newfront presenter in 2011 and 2012, and has a lineup of original programming that includes “The Comment Show,” “Lyric Lines,” and “VEVO Certified.”

*Morris does not have an operational role at VEVO, though he said he closely follows the company as the chief at SME, which is a VEVO stakeholder.

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