For the past six months, Vevo has openly discussed its plan to build a new subscription video service, through which it raise its brand profile and improve its market share in the world of streaming music. Building that service won’t be cheap, and so Vevo is looking to pick up a big-time funding round. According to the Financial Times, the music video platform is looking to raise somewhere between $300 million and $500 million to support the launch of its new initiatives as well as its continued international expansion.
To secure the capital it seeks, Vevo has hired Goldman Sachs to advise its fundraising efforts, though it’s not yet known which investors Vevo and Goldman will target. Whichever entities do eventually buy into the platform will join its existing shareholders, led by founding partners Sony Music Entertainment and Universal Music Group, which each own sizeable stakes in the company.
Sony and Universal are two members of the recording industry’s “Big Three.” The third member of that triumvirate, Warner Music Group, recently struck a landmark deal with Vevo, ending a dispute between the two companies that dated back to 2009. With the Big Three united within its network, Vevo can ensure its subscription service offers a competitive library.
Of course, for Vevo’s big step forward to be successful, it will need more than just a fully-stocked catalog. As I wrote back when Vevo announced a rebrand last month, the company faces a daunting task. It must convince many of the users who access its music videos via YouTube to shift their viewership over to the new subscription platform, and that’s where its proposed influx of capital comes in. With a mid-nine figure budget, Vevo can build a strong service across TV, mobile, and over-the-top devices, and it can stock that service with premium content that will attract users. That’s the plan, at least; now we wait to see how much funding Vevo manages to raise.