Report: YouTube, Universal building Internet-age MTV

Once again, Google is trying to generate some real cash from YouTube. This time, it's reportedly teaming up with the nation's largest recording company, Universal Music, to build a premium music video site that aims to attract high-end advertisers that may have shied away from low-brow YouTube in the past.

CNET reports that YouTube and Universal Music are nearing a deal that would result in the two creating a music video site--using YouTube video and advertising technology--designed to be the largest music-oriented site on the Web. CNET sources say the talks are ongoing, but a deal could be reached in the next few weeks. The site--tentatively called Vevo--would work this way:

A standalone music site--which would feature traditional music videos and interviews, along with other artist-driven content--is designed to attract high-end advertisers, some of whom may have been skittish in the past about advertising alongside YouTube's user-generated videos...the deal would give Universal some control over the revenue generated from its music videos while also allowing the company to benefit from YouTube's technology expertise.

If the deal is struck, it would be good news for YouTube and Universal, as well as any other music industry partners that choose to come aboard (other major labels, including Sony Music Entertainment, Warner Music Group and EMI have all reportedly been approached about joining the site.)

The major labels have never been all that happy with their current YouTube licensing agreements (which are currently being renegotiated), and a separate premium channel would solve a lot of problems. For example, like Hulu.com, Vevo would be completely music label-sanctioned, skirting any pesky copyright and legal issues. It would also be more of a magnet for higher end music advertisers, since they'd be assured that their ads would not be served alongide videos of more pedestrian YouTube fare, like pratfalls and Japanese dogs riding bikes. Plus, a music-only site would rake in a more targeted--and lucrative--audience, increasing revenues for all concerned.

It's a good plan, and one not without precedent. As CNET says, just look at what MTV did for TV-based music videos. By tailoring an online music site to their specs, Google and Universal may finally be able to generate some real revenue from YouTube.

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