Google looking to make strategic $50M investment in Vevo to keep its high-quality music content on YouTube

Two weeks ago, we heard Google planned to invest in Vevo. Today, those rumors heat up with some specifics…

Bloomberg has the story:

Google Inc.’s YouTube is negotiating a $50 million equity investment in music video service Vevo LLC, according to two people with knowledge of the situation.
Google would own less than 10 percent of the company, giving Vevo a valuation of at least $500 million, said the people, who asked for anonymity because negotiations are still early and an agreement may not be reached.
The investment would be part of a broader contract to keep Vevo’s music videos on YouTube, the people said. Vevo, formed in 2009 by Vivendi SA’s Universal Music and Sony Corp.’s Sony Music Entertainment, and Google last year extended their existing contract until April.

Some of the most valuable (and clicked) content on YouTube is from Vevo-associated Artists. Vevo previously threatened to leave YouTube, so the investment would be to secure long-term access to the content advertised on and monetized by affiliate links to buy music.

It is also important to Google’s ecosystem to have easy and cheap access to all of Vevo’s content.

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Universal Music Group signs deal to pay indie publishers for YouTube, Vevo content

After years of major record labels keeping the revenue from their ad-supported content on YouTube and VEVO, HollywoodReporter reported today that the National Music Publishers’ Association announced a deal with Universal Music Group (one of the owners of VEVO), which will see the label pay indie music publishers for the content:

The NMPA termed the agreement, which covers North America, a groundbreaking model licensing deal because it will allow songwriters and music publishers to share in revenue from music videos. Up until now, while Youtube and VEVO were making money on their ad-supported services, indie music publishers had not shared in that revenue because the major labels long considered videos as promotional tools and never paid for licensing the songs used in the videos. But as it became a growing revenue stream, indie publishers began to grumble that the major labels paid the major publishing companies but none of the independent music publishers.

The specifics of the deal have not been made public, but the report claimed that sources said publishers would get 15 percent of advertising revenues related to their content. It also claimed the deal would be “retroactive back to 2008″ with the amount for 2008 and 2009 set at 10 percent. The deal is said to cover not just music videos, but also “concert footage, backstage videos and artist interviews.”

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Google and Facebook considering investment in Vevo as YouTube deal comes to an end

According to a report from The New York Post, Google’s CEO Larry Page is considering extending the company’s relationship with label-backed music-video service Vevo by possibly buying an equity stake in the venture. The report claimed that Facebook is also considering making an investment in Vevo, which is reportedly currently valued at $1 billion and run by major labels including Universal Music Group and Sony Music.

Both Google CEO Larry Page and Facebook’s Mark Zuckerberg are exploring an investment in Vevo as part of a broader partnership with the music-video service, The Post has learned.

Vevo already has a deal with Google to host its content on YouTube, but the report noted that agreement lasts only through the remainder of 2012. Vevo is reportedly negotiating with YouTube to accept lower than the two-thirds of ad-revenue it currently receives from the Vevo content that it hosts. As The Post pointed out, recent stats from comScore listed Vevo as YouTube’s top partner channel in April with 48 million unique viewers during the month.
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