YouTube, Universal Music to start online video site
Google Inc.'s YouTube and Vivendi SA's Universal Music Group plan to start an online music site called Vevo in an effort to increase advertising sales.
YouTube will provide the technology for the service, which will host videos from Universal artists including U2, Beck and the Rolling Stones, the companies said today in an e-mailed statement. The two companies plan to share advertising revenue on YouTube and Vevo.
"It signifies a pretty significant shift in the way Universal Music Group, which is the world's largest music label, and YouTube will work together," David Eun, vice president of strategic partnerships at Google, said on a conference call.
Record labels are seeking to boost online revenue to make up for declining compact-disc sales. Media companies have fought with YouTube, which has more than 100 million viewers in the U.S., over the use of their material and how they are compensated. In December, Warner Music Group Corp. removed videos and songs from YouTube after royalty negotiations failed.
Doug Morris, chief executive officer of Universal Music Group, is working to get others labels to join.
"We're in the middle of discussions with all of them," said Rio Caraeff, executive vice president of Universal Music's eLabs digital strategies division. "We hope to have more than UMG when we launch."
Merchandise
The site could offer features beyond what YouTube provides, including additional interactive elements, Eun said. Users also will be able to purchase digital music tracks and merchandise.
EMI Group Ltd spokeswoman Jeanne Meyer said the talks are at a "very early stage."
"Universal has reached out to us and we're certainly open to having the discussions," said Meyer. Warner spokesman Will Tanous declined to comment. Sony spokeswoman Claire von Schilling didn't immediately return a call seeking comment.
YouTube also said it renewed a partnership that lets consumers create and watch user-generated videos containing Universal's recordings and compositions. YouTube has deals with two of the biggest labels, Sony Corp. and EMI Group Ltd.
The site by Universal and Google follows what some television companies are doing with Hulu.com, whose owners include NBC Universal Inc. and News Corp.
Walt Disney Co. agreed last month to put ABC and ESPN clips on YouTube. Sony said yesterday it was in discussions with YouTube to show long-form content, including movies. YouTube declined to comment those discussions.
Google, based in Mountain View, California, rose $10.50 to $372.50 at 4:29 p.m. New York time in Nasdaq Stock Market trading. The shares have risen 21 percent this year. Vivendi climbed 81 cents to 20.62 euros earlier in Paris.