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With sale looking likely, Vevo keeps growing brand

By Lidya Patal     Aug 18, 2014 in Music
Can Vevo survive life after YouTube? Will it be sold to the highest bidder? The company is hoping for both, and moving swiftly in the new-media sphere to hedge its bets.
Rumors that music video platform Vevo will soon be on the selling block have swirled in the media for months. The service is looking to expand beyond YouTube, where it has enjoyed a mostly symbiotic relationship since partnering in 2009, either through sale or partnerships with other revenue creators.
In the Vevo platform, two of the major music labels -- Universal Music Group and Sony Music Entertainment -- found a way to monetize its licensed artists on YouTube, the world’s largest video service. Vevo netted nearly $250 million in 2013, with much of those earnings from YouTube’s display ads going directly to the pockets of Sony Music and Universal Music. Analytics show Vevo racks up nearly six billion unique video plays per month through YouTube, meaning artist exposure and ad revenue have soared.
Despite the nine-figure revenue and a total estimated value of between $700 and $1 billion, Vevo operates at a loss. Fifty-five percent of revenues are split between owners Universal and Sony, and Google -- parent company of YouTube -- takes another large chunk for distributing the content. Which means that the labels who hold the music licenses are happy with Vevo’s return, but potential buyers (which include everyone from Dreamworks to Yahoo to Amazon) may balk at the currently slim profit margins.
That may be why Vevo has announced two new partnerships in the past few days, one with Pinterest and another with Vadio. On Pinterest, users will now be able to “pin” videos from Vevo’s vast catalog on their walls, friends’ walls or on Vevo’s own wall. Vevo is the third video platform to partner with Pinterest, after YouTube and Vimeo.
Vadio is the less-heralded but possibly more lucrative deal. The fledgling company, which just received $2 million in funding, works with streaming radio and music services like Pandora and Spotify to incorporate video into what has always been a strictly aural experience. And even better, Vadio pulls a video into whatever platform a customer is streaming from, meaning users don’t have to toggle away from the app or browser.
Vevo’s willingness to partner with a young company shows that the platform is increasingly eager to find new revenue streams for life after YouTube. The service, which reportedly already gets more of video plays from mobile, tablet and TV than from desktops, and its two recent partnerships show that the company is eager to diversify -- and profit -- as it moves forward.
More about Vevo, YouTube, Spotify, Pandora, vadio