Major Labels

Vevo Is No Longer For Sale, And I’ll Bet I Know Why

vvoMusic video hub Vevo is no longer for sale, according to reports that surfaced late yesterday. It is an unusual shift for a property that spent the last months strengthening itself for a sale. The "leaked" story is that Vevo's owners – Universal Music, Sony Music Entertainment, Google and the Abu Dhabi Media Group – pulled the sale because they believe that Vevo is poised for rapid growth, according to The Post.

But there's likely another reason that Vevo is no longer looking for a suitor.

Vevo certainly proved its value. It's YouTube's #1 music video channel and is planning a major international expansion. But the profitability of the service – and thus, its value to any prospective buyer – depends almost entirely on the royalties that a new owner would have to pay to artists and labels.  

image from www.androidpot.comWith the world's two biggest music groups – Universal and Sony – collectively controlling a large percentage of Vevo's content, rates could have been set to make a purchase attractive.  Instead, it seems likely that big music decided that lowering rates to the point where a new owner could operate Vevo profitability was out of the question.

It's a calculation that major labels and publishers have often made often in the past, to the detriment of music tech innovation.

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  1. But to the benefit of artists and labels surely?
    Music tech companies need to develop business models based on the cost of royalty rates which work for artist/labels, rather than the other way around.
    Because of scale, music tech companies have a range of revenue earning options, artist/labels are more limited by possibilities.
    So, this is good news for the industry.

  2. I agree. I’m a bit confused by the last statement of the article. It is a problem that tech companies rely on cheapening licensed content in order to innovate. It is definitely a problem of scale but there are plenty of API’s available for start-ups to have access to vast catalogs of licensed music

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