YouTube Is Ready to Invest in Vevo, but the Deal Isn’t Done

Source: AllThingsD

YouTube is set to make another big investment in a content partner. This time around it’s Vevo, the music video site.

YouTube and its owner Google have agreed to buy a minority stake in Vevo, according to people familiar with the deal, which hasn’t been finalized.

If it happens, it will be the second time in the last year that Google has invested directly in a video company that relies on YouTube for distribution. In May, Google put money into Machinima, the Web video network aimed at gamers.

If the deal does get done, it will allow the two sides to continue with a symbiotic — and at times contentious — relationship that has gone on for three years: Vevo gets to distribute its clips on the world’s largest video site, and YouTube gets to keep showing music videos from the big labels, which account for many of its most popular clips.

I don’t know the size of the planned transaction, but I’m told it will be bigger than the $35 million funding round Google and YouTube led in Machinima last year. Like Hulu, the TV site, Vevo is a complicated joint venture between content owners — in this case Universal Music and Sony Music — and an outside investor — in this case Abu Dhabi Media.

But while both YouTube and Vevo have signed off on the investment and a renewed distribution deal that includes long-term licenses for the videos, the deal hasn’t closed and could still be derailed.

For starters, the deal is supposed to get done at the same time that YouTube signs separate agreements with Sony and Universal, which cover subjects like user-uploaded videos that incorporate music the labels own. And relationships between the two labels — and between the labels and YouTube — have been rocky at times.

That’s one of the reasons Vevo had previously explored alternate distribution deals with Facebook and Viacom’s MTV over the past year.

But it makes the most sense for YouTube and the labels to work together. The labels would like to see more money than they currently get from YouTube, but it would be hard for them to walk away from the revenue they’re already getting.

And while YouTube has worked hard to attract more “professional” content on the site — which is why it has been writing advances to video makers to create “channels” on the site — the labels’ videos remain enormously popular with its young audience.

Meanwhile, both the distribution and the investment will be crucial for Vevo, which operates a very thin-margin business.

Under both the old deal and the new one the company is set to strike, Vevo hands over about a third of its revenue to YouTube, and more than 50 percent of its revenue to the labels, which doesn’t leave it much in the way of an operating budget. Last year, Vevo CEO Rio Caraeff said his company was doing more than $150 million a year.

Amazon Brings MP3 Store To Apple’s iPhone, iPod

Source: Hypebot

Amazon MP3,  the second most popular digital music store, is now accessible via Apple's top ranked portable music devices, the iPod Touch and iPhone, for the first time. "Since the launch of the Amazon Cloud Player app for iPhone and iPod touch, a top request from customers has been the ability to buy music from Amazon right from their devices," according to Steve Boom, VP of Amazon Music.

Users also have access to Amazon features including personalized recommendations, best-seller lists and Amazon customer ratings. Downloads are automatically saved to a free Amazon Cloud Player library and can be downloaded or played instantly from an iPhone, iPod touch or iPad along with the Kindle Fire, Android phones and tablets.

The Amazon MP3 mobile website is built on HTML5 and available at www.amazon.com/mp3.

Pandora To Pay Sony/ATV 25% Higher Rate

Source: Hypebot

Just last month Pandora was in Washington asking for lower rates. Now comes a report that they've agreed to pay more. Music publisher Sony/ATV has independently negotiated a 25% increase in royalties from Pandora, according to the New York Post.  The result is likely to be more publishers demanding higher rates.

Sony/ATV, a joint venture of Sony and the Michael Jackson estate, won the big increase for the next 12 months after it pulled digital rights from BMI and ASCAP on Jan. 1st.  Sony/ATV declined to comment, but CEO Martin Bandier, told The Post: “At the end of the day, we got a terrific deal for our songwriters. Our thinking has been vindicated. Hopefully it’s the first of many.”

Pandora has repeatedly argued that it can not contniue to pay high royalty rates and survive.

The majority of royalties paid by the music streamer go to SoundExchange on behalf of artists and record labels. A much smaller share, estimated at 4% of Pandora's gross revenue of $275 million, goes to ASCAP, BMI and now increasingly direct to publishers like Sony/ATV on behalf of copyright holders.