Universal Music Group is in negotiations with YouTube that could make help solve licensing issues and elevate the video-sharing site to MTV status.
The joint-venture site, tentatively referred to as "Vevo," would generate much-needed revenue for Google, which purchased YouTube in 2006. Google paid $1.65 billion to acquire the video-sharing site, which surpassed 100 million viewers for the first time this January.
Universal reportedly approached Google last year about negotiating the launch of a premium online music destination, say people familiar with the deal.
The deal, which would also be expected to lessen tensions between YouTube and the music industry, would mark an important route of action in Google's attempt to generate revenue from YouTube, which has proved difficult in the past.
Vevo would generate revenue through the sale of concert tickets and merchandise. The site would include music videos from Universal, with the possibility of also including Sony Music, EMI Group, and Warner Music Group in the deal.
Universal's current licensing agreement with YouTube expires at the end of March, and a new deal is expected for April. The main issue of the negotiations is trying to find a solution that will adequately compensate Universal and its artists. YouTube would be expected to provide the infrastructure to sell advertising with the music videos.
If an agreement is reached, the deal would make YouTube a sort of 'digital MTV.'
Phil Leigh, senior analyst at Inside Digital Media says that MTV has been moving away from showing music videos and showing more reality shows. "In doing so," he said, "MTV has sort of abandoned its original mission. That creates a vaccuum, and YouTube can fill that vaccum."
Universal is the world's largest music label, and YouTube is the number one video-sharing network in the Unied States, according to the market research firm comScore.