Vevo founder and Sony Music Entertainment executive Doug Morris has given Google an ultimatum: Lower your fees, or we’re taking our business to one of your competitors.
Morris told the Los Angeles Times on July 11 that if Google doesn’t reduce the cost of posting on YouTube, “there are at least three other companies who want to take our videos.” (Morris is speaking of Facebook, Microsoft, Apple and Amazon.com.) Vevo has the video licensing rights to YouTube’s – and pop music’s – biggest stars: Justin Bieber, Rihanna, Lady Gaga, Eminem, Beyonce and dozens more.
Unlike other partners on YouTube, Vevo handles all their own ad sales – which they charge at higher prices than regular YouTube ads – and they give a cut of that ad revenue to Google for use of their platform. Morris wouldn’t offer the specifics on the size of that cut, but did call it “too much” considering the cost of video production. “[T]here are many mouths to feed on our end,” Morris said. “You have to pay the artist, the record companies, the publishers.”
Threatening to go to a competitor might be a negotiation tactic for Morris, who described talks with the tech giant over fees as “slow”; leaving YouTube would potentially be a lose-lose situation for both companies.
While Vevo is the most popular partner channel on YouTube, drawing 694.9 million views in May alone according to Nielson, YouTube is the second most popular search engine in the world. The amount of views Vevo content gets is directly related to its partnership with YouTube, and Google. If Vevo were to leave to go to a competitor with a significantly lower traffic ranking, they wouldn’t be able to charge as much for the advertisements that play before each music video.