Google's YouTube and Universal Music Group, the world's largest music company, said on Thursday they will launch a premium music video website as they bid to increase revenue from YouTube's huge usage.
The new advertiser-supported site, featuring professional videos, will be called Vevo and is expected to launch in coming months, the companies said.
The deal is a boost for YouTube, which has been under increasing pressure from music labels and publishers who are frustrated that the popular site has been unable to pay higher fees for rights to use their music and videos.
Talks broke down late last year between YouTube and the No.3 music company Warner Music Group. Last month YouTube was forced to block all music videos in the UK and last week it had to do the same in Germany in a similar dispute with song publishers over money.
Vevo is an attempt to address this disparity between YouTube's popularity, it has 100 million users in the U.S. alone according to comScore, and its relatively low advertising rate or CPMs (cost per thousand page views) as it is called.
The new site will be a music video hub wholly owned by Universal, a unit of French media group Vivendi.
It will feature higher-quality videos, as opposed to the typical grainy and often user-generated videos on YouTube.
The idea is for Vevo to attract big-name advertisers and other content-owner partners.
"The rationale is to help make Vevo a place that brands feel more comfortable," said Rio Caraeff, executive vice president of Universal's eLabs.
"Ultimately we think it will increase in effect the CPMs and drive more revenue to YouTube and more revenue to the music business than they can have today," said Caraeff.
YouTube and Universal Music will share advertising revenue generated by the site. Both sides are betting that building a premium site will help increase advertising rates. Many big brand owners have avoided advertising alongside YouTube's ad hoc mix of user-generated videos.
