YouTube Partners with Universal Music

YouTube has partnered with Universal Music Group (UMG) to launch a new music video service called Vevo. Under their agreement, YouTube will provide the infrastructure for a new site at Vevo.com, to be populated with video from artists on UMG-owned labels such as Decca, Def Jam, Mercury Records, and Verve.

YouTube will also host those videos on its own site, where they’ll be housed in a Vevo channel via an embedded player. The companies will share revenue for ads served on both Vevo and YouTube.

The deal is a victory in Google’s ongoing efforts to convince major entertainment companies to distribute their video assets to YouTube’s vast audience. It also represents something of a divergence from Google’s usual approach of keeping that content on its own properties.

In February YouTube originated more than five billion video streams in the U.S., more than 16 times the number of its nearest rival, according to Nielsen Online. However its hosting and bandwidth costs are rising, and precious little of that content can be easily sold to advertisers. The latter challenge is a major reason the site is preparing a redesign of its homepage and navigation. As ClickZ reported last week, the redesign will separate its premium and long-form programming from the user-posted videos that account for most of its activity.

YouTube is pursuing big licensing deals on a number of fronts. It’s reportedly in talks with Sony to license feature-length films, and with CBS to get distribution rights for its current TV shows. YouTube already carries long-form television programming from CBS and Sony, but the shows are old fare — “Beverly Hills 90210,” “MacGyver, and “Star Trek The Original Series,” among others.

As part of the music video deal between YouTube and UMG, the studio giant will also continue to participate in a YouTube program allowing studios to exercise their intellectual property rights on user-generated videos that use their recordings. Under the program, UMG is entitled to a cut of ad revenue from advertising served alongside those videos.

When Vevo launches later this year, it will contain UMG’s entire catalog of professionally created music videos, along with artist-created videos and user-generated clips hosted on YouTube.

“Vevo will expand the premium video marketplace, generate new revenue streams for content creators, and provide brand advertisers an unprecedented opportunity to get in front of a highly engaged audience,” said Doug Morris, UMG’s chairman and CEO, in a statement.

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