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.
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.
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