14 DAY TRIAL // Online video isn't exactly the most lucrative business yet and it isn't one that's particularly easy to become successful in. YouTube dominates the landscape but even the Google-owned site isn't profitable yet. Still, professional content sites like Hulu proved that online video can generate decent revenue and, considering that music videos make up a huge percentage of YouTube's views, a dedicated music video site sounded like a good idea. Universal Music thought so and joined Sony Music to create Vevo, an upcoming music video site, which has now secured an undisclosed sum in funding from Abu Dhabi Media Company.
This solves a couple of the project’s problems. The most obvious one is that it needed the money to get started and, considering that it was looking for a $300 million valuation, which it apparently got now, investors weren't exactly lining up to unload their money. The site was on track to be launched sometime this year and, though some of the details remained sketchy, the funding pretty much guarantees it.
But this wasn't a garage startup desperately seeking investors, it was backed by two of the four major music labels and, even with their declining revenue, they could have scraped the sum needed to get the project going. Why then the need for a private investor? Well, it has less to do with financial well-being and more to do with anti-trust legislation, as a joint venture between the major players in the music business doesn't exactly spell out competition. With the outside money secured, the labels can breathe easier and their stake in the company will likely come from the vast catalogue of music videos they provide rather than actual cash.
Vevo is set to launch in December and the site has been in the works for more than a year. Universal Music Group has partnered with Sony Music Entertainment for the site and it will be backed by YouTube, which will provide the technology and infrastructure. Vevo will have its own dedicated website but will also have its own branded channel and player on YouTube itself, similar to what Warner Music, which hasn't been interested in Vevo, has announced.