Hot on the heels of their Click-to-Buy expansion (not to mention some gloomy revenue forecasts), YouTube announces its latest venture: a new, jointly-owned site from the video giant and Universal Music Group, to be titled Vevo.
Launching in the coming months, Vevo will also integrate with YouTube as a “new VEVO channel through a special VEVO branded embedded player,” according to AllThingsD. Peter Kafka also points out that this is a win-win for the two media companies:
YouTube, which dominates the market for Web video but can only sell ads against a small portion of the clips it shows, gets to hang on to valuable, advertiser-friendly inventory.
Universal gets its best shot at make money from something other than music sales, which it desperately needs to do. I’m also assuming that it gets a large chunk of cash upfront: The press release says the two companies will share ad revenue, but I’d be shocked if UMG CEO Doug Morris wasn’t able to wrangle a significant advance from Google. . . .
The deal is also an important signal to other content providers YouTube would like to do business with: Give us your best stuff, and we’ll cut you a special deal.
Hulu-killer, here we come, eh?
In December, reports indicated that Universal was making money from deals with YouTube already, with Google paying Universal a pittance (“a fraction of a penny,” according to Kafka) for each video view. This previous arrangement was a bit of a sticking point between the two companies. Kafka reports that YouTube complained about losing money with the previous arrangement, while Universal complained they weren’t getting paid enough.
What do you think? Is this new partnership a harbinger of content deals to come? Will other music labels, still enjoying a love-hate relationship with YouTube, sign on or create their own sites, with or without YouTube?