New York — Google Inc’s YouTube, the video-sharing Web site and Universal Music Group, the nation’s biggest recording company, are in the final stage of discussion to launch a music video site tentatively called Vevo, according to sources familiar with the matter said on Wednesday.
The discussions are still in its infancy, said the people, who declined to be named because the discussions are private. Universal approached YouTube with the idea during the end of last year and proposed a site that would include videos from all the major music labels, one of the people said.
The sources mentioned that the proposed service, which is tentatively named Vevo, would be the outsourcing site closely linked to YouTube. Should an agreement be reached, Vevo would likely be the largest music-oriented site on the Web. Talks are ongoing, but a deal could be reached as early as the next few weeks, sources said.
A YouTube spokesman said: “We are always working with our partners to find creative ways to connect music, musicians, and fans.”
Universal’s YouTube channel is by far the largest on the video site. The label’s music videos have been viewed more than 3.5 billion times. Vevo and the joint venture with YouTube were boiling up since last year’s campaign by Doug Morris, Universal’s chairman and CEO, to develop music videos into a standalone business.
The plan is to boost music video ad revenues by hosting them in a more brand-friendly environment than YouTube currently provides; YouTube would also provide tech and ad sales support, helping to get UMG’s content distributed on other sites as well.
If a deal is finalized, then the service could mark a significant step forward in Google’s attempt to generate revenue from YouTube, which it acquired for $1.65 billion in 2006.
While YouTube has largely struggled to generate meaningful revenues from its swatch of user-generated content, music videos have been a cash cow?and the labels have been pushing for a bigger cut in recent weeks of negotiations. Sony BMG was the first major to renew its licensing agreement with YouTube, but discussion with Warner Music Group (WMG) ended with WMG taking down all of its content; this partnership could be one way for YouTube to appease UMG and make more money for itself in the process.
Google CEO Eric Schmidt said this week at an investor conference that YouTube is slowly working out ways to make money from online video.
A deal would also represent a expanding of the sometimes fractious ties between YouTube and the media industry, which has on occasion ordered the popular video-sharing site to pull down clips of TV shows or music videos uploaded by users without the media companies’ permission.
However, many of the finer points, such as financial terms and whether the service would be run as a joint venture, are still being worked out, the sources said.
The discussions between YouTube and Universal Music — whose artists include Kanye West, U2 and Amy Winehouse — for a service backed by all the major labels have been held up by the video site’s fallout with Warner Music, one of the sources said.
Universal’s current licensing deal with YouTube expires at the end of March, and a new deal is expected for April. EMI is also in contract renewal talks with YouTube.
It could also be one of the most amicable pairings, as CNET notes that UMG’s YouTube channel is the largest on the site, garnering over 3.5 million views, and UMG reportedly had plans to launch a “Hulu-like” music video site on its own last year.
Universal declined to comment.