Google’s YouTube is negotiating a $50 million equity investment in music video service Vevo, according to two people with knowledge of the situation. The deal would bring additional consolidation in the online video advertising market.
Google would own less than 10 percent of the company, giving Vevo a valuation of at least $500 million, said the people, who asked for anonymity because negotiations are still early and an agreement may not be reached.
The investment would be part of a broader contract to keep Vevo’s music videos on YouTube, the people said. Vevo, formed in 2009 by Vivendi SA’s Universal Music and Sony Corp.’s Sony Music Entertainment, and Google last year extended their existing contract until April.
“While we don’t comment on individual negotiations, we always hope to renew our relationships with valuable partners so we can continue to provide YouTube users with the best possible music experience,” Chris Dale, spokesman for Google, said in an e-mailed statement.
Vevo, which shows videos from artists signed to labels owned by Sony Music and Universal Music, drew 51.6 million unique U.S. viewers in December, according to ComScore Inc., the Reston, Virginia-based researcher. By comparison, Google’s websites including YouTube had an audience of about 181.7 million.