Facebook and Google to duke it out for Vevo?

1 Jun 2012

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Search giant Google and the worlds’ biggest social network Facebook are both trying to court popular music video service Vevo, the New York Post reported.

The New York Post exclusive yesterday claims both Google and Facebook are exploring an investment opportunity in Vevo, the MTV of the digital era.

Though sources in the report are unnamed, the idea that either of these companies would be in talks with the US$1bn company is not unusual.

Why the competition?

Currently, Vevo has a partnership with Google wherein YouTube hosts its videos in exchange for one-third of the advertising revenue, but this contract is set to expire at the end of this year and Vevo, apparently, would like to negotiate a better deal.

Facebook has already expressed an interest in developing a partnership with Vevo, which ranks just above Facebook as the third-most watched video site in the US (with Google coming in first and Yahoo! second).

If either of these companies made an investment in the popular music-video streamer, they could claim exclusive access to streaming content, which would be a key driver of online traffic and potential ad revenue.

Vevo currently streams video at Vevo.com and mobile apps, and licenses content to MTV.com and YouTube. It is YouTube’s biggest partner channel, with ComScore reporting 48m unique viewers in April.

How Vevo can benefit

Vevo – which is a joint venture between Universal Music Group, Sony Music and Abu Dhabi Media Co – could very well be in a position to play one side against the other here as it seeks the best way to expand its business. The service plans to further its reach in other countries, for which it needs to acquire music rights, and also to spread to multiple platforms – all of which will require funding.

Other options for Vevo include selling or going public, and the company has hired investment bank Allen & Co to advise on which route to take.

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Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com