Report: Vevo Walking Away From YouTube Would Be Bad For Both Companies

Vevo founder Doug Morris, the CEO of Sony Music Entertainment, has warned Google to sweeten the deal between YouTube and Vevo, or the online music video giant will take its videos elsewhere.

Morris issued the warning in a Q&A with the Los Angeles Times’ Alex Pham.

“[YouTube is] just extracting too much money for the enterprise to work properly,” Morris said. “The videos are expensive to produce. And there are many mouths to feed on our end. You have to pay the artist, the record companies, the publishers.”

Morris does not disclose the ad revenue split, YouTube and Vevo have a very different deal than most YouTube partners, which usually give YouTube up to a 50 percent split for one of their uploaded videos. Whereas YouTube usually sells those ads, Vevo sells its own and pays a fee to be on the YouTube platform.

Forbes’ Michael Humphrey says this begs two questions: does Vevo need to be on YouTube if it controls its own audience and sells its own ads? Does YouTube need Vevo when it already has trillions of views each year?

Humphrey argues that Vevo needs YouTube because YouTube is synonymous with online video on every device: television, mobile phone, iPad and laptop/personal computer. Vevo also benefits from YouTube’s ease of sharing and searching, he says.

Although a lot of Vevo’s sharing already happens on Facebook, the question becomes how well sharing would move off of Facebook if Vevo decided to relocate there. “Living in a giant walled garden is not the same as living in the world, as much as Facebook would like that to not be true,” Humphrey says.

Meanwhile, YouTube needs Vevo’s quality content, he claims. Vevo is by far the most-watched channel on YouTube, amassing 618 million views alone in May. This makes it the standout example of quality content for a site that wants to become more like a TV network. If Vevo left YouTube, Humphrey adds that music video piracy would also come back in force, which would be a headache for the labels backing the music video giant.  

1 comment about "Report: Vevo Walking Away From YouTube Would Be Bad For Both Companies ".
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  1. Marc Roth from CozyLap, July 13, 2012 at 11:42 a.m.

    If I'm Sony I'm looking for disruptive technology in the ether to leapfrog YouTube and making less waves. Still I'm surprised if the ad revenue is more than the cost of iTunes share of album sales.

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