YouTube, Universal Music Discuss Partnership, New Hub for Music Videos

Google Inc.'s YouTube and Universal Music Group are discussing a significant partnership under which YouTube would provide technology and ad sales support to help distribute Universal's video content to other Web sites, said people familiar.

The plan would entail YouTube's building a new hub for music videos, people familiar with the matter say, in order to sell more, higher-priced ads against the popular content.

Financial details of the arrangement — which is in negotiations and could still fall apart — could not be learned. But the partnership would represent YouTube's stepped-up efforts to lure premium content through added services and promotion beyond basic ad-sharing relationships it has relied on in the past.

Talks about the new effort, which has the working title "Vevo," have been under way since last fall, according to people familiar with this matter, and are at an advanced stage. The arrangement is still weeks away from being finalized and could still fall apart, they say.

Whether YouTube is discussing a similar agreement with other music companies with whom it is in regular negotiations remains unclear.

A spokesman for YouTube declined to comment on any discussions with Universal, but said "we are always working with our partners to find creative ways to connect music, musicians, and fans." A spokesman for Universal declined to comment.

The plan aims to help both companies milk more money out of music videos, which are some of the most popular on the video-sharing site. The idea is to better showcase the videos on and off the site in a way that appeals to advertisers, people familiar with the matter say.

It comes as tensions between YouTube and the record labels have escalated in recent months, with both sides facing pressure to earn more revenue. In December, Warner Music Group Corp. removed its songs and videos from the site, after talks to renew their licensing agreement failed.

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