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article imageOp-Ed: With potential sale off the table, what's next for Vevo?

By Lidya Patal     Aug 22, 2014 in Music
After months of rumors, reports and speculation, the music heavyweights behind major music video aggregator Vevo have removed the For Sale sign. Where does Vevo go from here? Digital Journal investigates:
Once courted by everyone from Amazon to Guggenheim Partners to Yahoo to Verizon, the music video behemoth Vevo is no longer for sale, according to multiple reports. Vevo's joint owners — Universal Music Group, Sony Music Entertainment, Abu Dhabi Media Group and Google — are now unwilling to part with the property.
One source said it was like a "lightbulb went off" and that instead of selling Vevo to the highest bidder, the owners realized could profit more from an in-house operation than outsourcing to another media property.
For the average music consumer who knows Vevo only as the accompanying graphic when playing a popular artist on YouTube, it's difficult to comprehend how the service is such a hot commodity. But for those inside the industry, Vevo enjoyed many advantages, advantages on which the aggregator's influential owners are poised to capitalize.
First, a look at the metrics: Vevo is a major destination on YouTube, the world's most popular video platform. Taken together, the Vevo channels for various artists had 227 million fans at the end of 2013. Individually, the RihannaVEVO channel is No. 11 on the list of most subscribed channels, with 14 million fans, and many more individual channels, including Taylor Swift, Justin Bieber and PINK follow close behind. According to Comscore, Vevo is the fifth-biggest video platform on the web, with 43.5 million unique viewers per month moving it behind only Google, Facebook, AOL and Yahoo.
Even with desktop video plateauing, Vevo hasn’t lost a step. That’s because the service has successfully pivoted to mobile, on which video consumption is currently exploding. According to sources, the mobile component — viewers consuming Vevo on tablets and smartphones — was a major consideration in the decision not to sell.
Vevo is also essentially a platform for Universal Music and Sony Music to promote their own artists. As currently constructed, the labels receive 56 percent of the Vevo’s revenues, which are largely based on YouTube’s lead-in and wallpaper advertising. If they sold the unit, the labels would need to negotiate licensing fees and risk cutting into profit.
Taking these factors into account, the decision not to sell becomes clear. Vevo is built on a solid product — high-profile artists who belong to the major labels which own the service — and the company is generating ever-increasing revenue. Most importantly, the service is eyeing expansion beyond YouTube, with a larger mobile presence as well as deals with Pinterest and Vadio.
Sources told the New York Post that the current owners agree Vevo should be developed into a “major entertainment platform” and recent business moves suggest the service is on the right track.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about Vevo, Universal Music Group, sony music entertainment, Google
 
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