Vevo's future business arrangements are looking a bit cloudy, as reports this week suggest that the company's deal terms with Google are again in play, and that Universal is re-examining its stake in the company in the relation to UMG's proposed acquisition of EMI's recorded-music division.
The Is-Vevo-Leaving-YouTube chatter resurfaced on Wednesday, when Sony Music chief (and Vevo co-founder) Doug Morris told the Los Angeles Times "there are at least three other companies who want to take our videos" if Google/YouTube and the labels do not reach terms in ongoing licensing negotiations. "Google is charging us a lot of money to put our videos on their platform, and we would like to reduce their fees," he added.
Though Morris aired his grievances about Google -- and cites Facebook, Microsoft, Apple and Amazon as potential suitors -- a Vevo spokesperson declined to comment on the report when contacted by Billboard.biz. However, one executive familiar with Vevo's partners told Billboard.biz today that the Morris and Universal reports are "definitely true" but suggested that both are just the latest efforts for Vevo's partners to negotiate through the press in the same manner that the first reports in January tried to play Facebook and Google off each other. "They're all trying to get a better deal," the source said.
Vevo CEO Rio Caraeff, for his part, told Billboard.biz in April "We have no intention to leave YouTube" when asked about where he saw the company's distribution in 12 months time.
In related news, a source close to the situation confirmed to Billboard.biz that Universal Music Group is in the early stages of reconsidering its Vevo investment, as part of its effort to trim $600 million from its balance sheet as the European Union weighs its approval of UMG's proposed acquisition of EMI's recorded-music division. That information was originally reported in Digital Music News,
(The fact that Sony -- which recently closed its acquisition of EMI Music Publishing -- is the one calling for a better terms, while Universal remains under regulatory scrutiny for its proposed acquisition of EMI's recorded-music division, has not gone unnoticed.)
Cashing out of Vevo may not seem as shocking when you consider the catalogs that Sony is shedding as part of its publishing acquisition, and that UMG may have to lose to acquire the label. As Billboard.biz reported last month, Sony will completely divest the Virgin Music catalog (including Kurt Cobain, Bryan Ferry, Culture Club, Devo, Iggy Pop, Lenny Kravitz, Robbie Williams, Tears For Fears, the Human League, Goo Goo Dolls, Jim Steinman and many others) as well as Famous Music U.K. According to the Financial Times, UMG is shedding its classical music publishing catalog of some 200,000 copyrights (which contains works by Ravel and Puccini; Brentwood Benson, a collection of Christian music; and Koch, a catalog of traditional German music) to deal with its debt issues, and more divestment is coming to satisfy regulatory requirements.
Another Vevo investor, Allen & Co., made ripples in May when a Sky News report claimed the bank was hired by Vevo to look into an initial public offering, a claim later refuted by the Financial Times. And just this past weekend, a pair of reports from the Wall Street Journal and L.A. Times cited Allen & Co. as being "close to" helping the company raise $100 tio $150 million in funding, which could put Vevo's valuation anywhere between $700 and $800 million or as high as $1 billion.
As for Caraeff, he's been largely silent since Vevo's first upfront event for advertisers in New York in late April. "I think a year from now you'll see the Vevo brand and the Vevo site and apps in many more countries, so there'll be another choice for people who want to get quality video experiences in other countries," he said in a Q&A published April 24. "It'll be led by television, but also the fastest-growing part is mobile and tablets and more global revenue. Right now the consumption is international but the revenue is domestic in terms of where the ad markets are. How do you make money in countries where you have a lot of consumption but the ad markets are less developed than the U.S. All these things you'll see us focus on over the next few years."