YouTube has confirmed that it has invested in music video site Vevo and has potentially managed to renew the partnership which provides the necessary rights to Youtube for showing Vevo’s music videos. The whole development is balanced by the fact that the two companies will share the ad revenue. Vevo is a music video and content distributor owned by Universal Music Group, Sony Music Entertainment and Abu Dhabi Media Group.
At one time, several rumors had marked their presence that highlighted that Vevo was planning to expand its business to generate some revenue. When such a story was viewable, it was reported that Google might just be the resourceful company to complete this purpose. Previously there were also reports in May 2012 on Google looking to acquire an equity stake in Vevo. This was based on a valuation of $1 billion. During the time that these articles existed, there were also some rumors that explained Facebook’s intentions on acquiring equity in Vevo.
Currently the terms of the deal haven’t been displayed out, but according to reports by The Financial Times on Tuesday and Billboard in February; it is estimated that the investment is reportedly worth between $40 million and $50 million. Such a deal helps in providing Google Inc. a 7 percent stake in Vevo.
With reports from ComScore, it has been broadcasted that Vevo is the third most-watched video site in the U.S. The report states that it had 52 million viewers for the month of March. This list was topped by Google, with 153.9 million viewers and Facebook roped in second with 63.8 million viewers. After this development, Vevo can utilize the money to expand its international presence. Furthermore, it will assist the progress in boosting the original music-related content which is present alongside the library of official music videos.
Such a notable trend of acquisitions and investments is gaining prominence as we move forward in time. And unless there are some productive and money-making returns from this deal, the investors just won’t present a platform just for fulfilling other companies’ interests. This development is a win-win situation for both parties. Especially Vevo can expand their interests beyond music videos to establishing apps for iOS, Android and Windows Phone Xbox. Additionally it will gain popularity by operating itself in a number of other countries.
On the other hand, it is an advantageous prospective for Google just by the fact that this type of investment helps ensures that Vevo won’t sign any deal with any other company. Thus this rubbishes away reports about Vevo signing a deal with Facebook.
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