YouTube invests in music video hub Vevo

Google Inc’s YouTube has announced that the company has invested in an online music video hub Vevo. Along with this investment Youtube & Vevo has also renewed their partnership under which Vevo’s music videos will be featured on Youtube and both would share the ad revenue.

Though the deal size is not disclosed by any of the companies, but was previously reported by Billboard that it is likely to be in between USD 40 million to USD 50 million, which gives Youtube 7% stake in Vevo.

YouTube has confirmed the investment. “We are excited by their future prospects and to provide YouTube users with the best possible music experience,” said YouTube in a statement.

Owned by Universal Music Group, Sony Music Entertainment and with a smaller stake owned by Abu Dhabi Media Group, Vevo is a music video and content distributor. It streams music videos on its site and also has co-branded “channel” on YouTube that features music videos from popular artists, including Rihanna, Adele and Lil Wayne.

Vevo, was in heavy negotiations to get a new distribution contract with Google’s YouTube network, it’s contract with YouTube ended in April and was operating under a temporary extension.

The company is planning to use the funds for expanding its international presence and  for creating original music-related content to add in its library of official music videos from Sony and Universal, but not from Warner Music Group, as it operates YouTube’s competing music channels.

YouTube is the world’s most popular online video destination, with more than 4 billion video streams every day. According to ComScore’s monthly media metrix report, Vevo had 50.2 mn unique visitors on Youtube, thus making it to top channel partner for YouTube, which can be taken as a reason for renewing partnership as YouTube would never prefer losing a vast viewer base and same can be said for Vevo.

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According to reports, Vevo had approached a number of potential investors, including Google itself, Allen & Co., and Guggenheim Partners. Earlier it was reported that both Facebook & Google were looking to make investment in Vevo for buying an equity stake in the company.

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