Vevo Seeks New Financing
Vevo, the online music video company, is seeking to raise new equity financing, people familiar with the company's plans said, amid plans to expand its operations overseas. — Vevo hired Allen & Co. to look for investors, the people added.
Context & Ripple Effects
Vevo launched in late 2009 as a joint venture between Universal Music, Sony Music and YouTube, built on a catalog of tens of thousands of licensed videos from the two labels. Within months of launch it was already out raising money at a reported $300 million valuation, per multiple sources at the time (that 2009 round).
Three years on, the company is back in the market: it has hired Allen & Co. to find investors for a new equity round, with people familiar describing overseas expansion as the goal. The story traveled widely on pickup from the Los Angeles Times, VentureBeat and TechCrunch, though the financing terms themselves remain unconfirmed.
First-order effects
- Universal Music, Sony Music and YouTube, Vevo's existing JV owners, face dilution if the Allen & Co.-run process brings in outside equity, while any new investor buys into a company whose revenue base is still concentrated in US advertising.
Second-order effects
- An international push puts Vevo's ad-supported model directly against local music video players and against its own partner YouTube in overseas markets, forcing the labels' JV to compete for the same international ad dollars its co-owner monetizes.
Third-order effects
- If label-backed digital ventures keep returning to outside capital instead of selling to platforms, the majors are effectively building standalone media companies whose valuations will be set by ad markets rather than by licensing deals.
The trend: Music-label-backed streaming ventures are shifting from licensing their catalogs to platforms toward raising independent growth capital to build direct-to-audience ad businesses.