YouTube-Backed Music Video Site Vevo Valuated at $300 Million

Music video site Vevo, the joint venture between two of the four big music labels, Universal Music and Sony Music, backed by YouTube, was first announced in April this year, with a launch date set for late 2009, but has since stayed mostly quiet. Paid Content now reports that the venture's CEO Rio Caraeff has been busy looking for investors to pony up for a stake in the site at a $300 million valuation.

It's unclear how much money he is looking to raise, though one estimate, based on Hulu's initial investment, may be around $30 million for a 10 percent stake. While the market for music startups seems pretty harsh at the moment, the site's high-profile backers, Universal and Sony providing the catalogue and Google providing the technical know-how and hardware capabilities, make it one of safest investments available. The potential market is also huge as Universal has the number one most watched channel on YouTube while Sony has the number three. Even so, it's unclear whether the company will manage to raise the sum needed before the planned launch date.

Vevo was initially pitched by Universal, with plans for an owned site going back a year now, but the venture took shape earlier this year when Sony Music announced it would also provide its artist library for the site. Still, the other two major music labels aren't likely to join in, at least not from the start. Warner Music has mostly criticized the site while EMI, the smallest of the four, has typically been reluctant to join any online foray.

While the timing may not be the best for a music startup, the backing of the major labels could do wonders for it as it did for the TV venture Hulu video site, backed by three of the four big TV networks, which has been a great success and has seen steady growth in user numbers and in revenue.