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