Universal, Google in talks about music video partnership..Google Inc. and Universal Music Group are in talks to enter a partnership that would create a new music video hub powered by YouTube, according to a report in The Wall Street Journal .
Under the partnership, Universal would use YouTube technology and ad sales to distribute content around the Web.
when Google-owned YouTube is searching for ways to monetize its vast amounts of video content and Internet traffic. The major record labels have also been exploring a number of online strategies for monetizing their music content as compact disc sales continue their steep decline.
Google (Nasdaq: GOOG) paid $1.65 billion for YouTube a few years ago.
Google's stock was down 4 percent to US$306.10 per share in mid-day trading on Thursday.
No deal has been officially announced by YouTube or Universal Music Group yet.
YouTube and Universal Music are reportedly trying to hash out a deal to create a premium music video site. Currently, many music videos can be found on YouTube, but a deal with one or more major record companies could create a more easily monetized and managed music video portal. YouTube may be looking at the model followed by Hulu, which pairs professional TV content with video advertisements.
Moving away from the current model of labels receiving licensing fees or a share of ad revenue for their videos, Universal wants a new relationship in which music videos are displayed in "high-quality" and are ad-supported. The site would be separate from YouTube's main site.
Google has also notified Warner Music Group, Sony and EMI about the plans but they are not part of the current negotiations.
The talks are still in their preliminary stages, despite beginning in January.
Universal CEO Doug Morris is said to be at the head of the talks and the move makes sense being that Universal's licensing agreement with YouTube is set to expire on March 31st.
The Universal Music Group channel on YouTube is by far its most popular, generating 3.6 billion views so far.
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