It seems YouTube and the Universal Music Group are in negotiations to create a new premium video sharing web site designed specifically for Universal music videos.
Although neither company has announced anything publicly, multiple people familiar with the negotiations say the companies are in early talks for the new site. Universal would provide the music videos while YouTube will host the content and sell advertising displayed in each music video.
Furthermore, YouTube and the music labels have started working together on a closer basis after they bumped heads a couple of years ago. Many videos on YouTube based on copyrighted music now have buttons to iTunes or Amazon so users are able to purchase music -- that way a cut of the music revenue now goes back to the record labels.
The problem was so large, in fact, Warner Music Group had all of its music videos removed from YouTube, stating the company "simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide."
A deal between Universal and YouTube shows Google's willingness to try and find new ways to help make money from the world's most popular video sharing site. Despite being the largest video sharing web site in the world, Google hasn't been able to cash in on user-generated content yet, and is going back to the drawing boards.
