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YouTube, Universal launching music site

Universal Music wants to do for music videos what NBC and 20th Century Fox did for TV shows online with Hulu: Turn them into a premium offering.

Universal, the world's largest music label, on Tuesday said it will team up with Google's YouTube to launch Vevo, a dedicated online site for music videos, in a bid to better control the music viewing experience. No date for the launch has been set.

Music videos have become "more of a commodity than we'd like them to be," says Rio Caraeff, Universal's executive vice president.

His plan is to reach out to the other major labels to join forces, and to then license and distribute music videos from Vevo to other music sites like Yahoo Music and MTV.com.

This is exactly how Hulu does it. Shows like Family Guy and The Office play on Hulu.com, as well as web affiliates like Yahoo, MSN and AOL.

The idea is that all music videos will be branded online as Vevo, and labels will be able to attract higher ad revenues for the video clips.

Greg Sterling, an analyst with Sterling Market Intelligence, says that despite YouTube's mammoth audience, advertisers are more interested in a targeted group they don't want to be lumped together with user-generated video.

"Hulu has proven that dedicated channels are more popular with advertisers," he says. "Advertisers would welcome this model."

Universal currently has the most watched channel on YouTube, with over 3.5 billion views, but Caraeff said that when Vevo launches later this year, its music videos on YouTube would look quite different.

Videos will be presented in higher quality, and he promises exclusive content from his artists not seen today.

"It will no longer be a Universal channel, but a Vevo channel, and we will control the look and feel of the pages," he says.

David Eun, Google's head of strategic partnerships, said the Vevo deal is a "dramatic" shift in how music labels look at their business models.

"There are many faucets people can drink from, but eventually only one well," Caraeff says. "We will be the well that powers many of those sites. This is a strategy that recognizes that scarcity is needed." So when advertisers want to reach music video fans, "We sell that audience across the web."