Google, Facebook Eye Vevo Stake, Ad Agreement

Both Google and Facebook want a piece of Vevo, the popular music video service that is a joint venture of Universal Music Group, Sony Music and Abu Dhabi Media Co.

According to two unnamed sources quoted in a New York Post report, the tech giants are exploring an advertising partnership in addition to a possible equity stake. The sources said that bringing in an outside investor would help Vevo acquire additional music rights and help fund its continued expansion on multiple platforms.

The music video site currently has a revenue-sharing agreement with Google’s YouTube to host its videos, for which it receives one-third of the ad revenue. This deal expires at the end of the year, and the sources claim that Vevo will be seeking better terms.

Earlier this year, Vevo integrated with Facebook’s Timeline and received a huge boost in traffic and engagement on its site.

While both Google and Facebook see music as a key means of attracting more ad dollars and are keen to partner with Vevo, the music video site is evaluating its options, having hired investment bank Allen & Co. to explore bringing in a new investor, selling the company, or a potential initial public offering. 

Vevo currently receives 45 billion video views per year. It is available in the U.S., U.K. and Canada, and plans to expand to six additional countries in 2012. According to the Post, the company’s current valuation is $1 billion on revenue of $150 million. 

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