• Bloomberg News, Tuesday, April 14, 2009 11:30 AM

Bloomberg has a story about the genesis of Vevo.com, the new joint music video venture from Universal Music Group and Google's YouTube. Apparently, the meeting between UMG Chairman Doug Morris and Google CEO Eric Schmidt that ultimately culminated in the deal, came at the urging of U2 frontman Bono, according to a source. Now, Vevo.com, which was announced last week, will stream videos from U2 and other UMG artists like Beck and the Rolling Stones. YouTube and UMG will split advertising revenues.

As Bloomberg points out, the record labels used to view music videos, which would appear on cable networks like MTV and VH1, as a marketing expense for promoting album sales. This is the first time a record label has sought to actually make money from music videos, which used to be sent to the cable networks for free. As Bloomberg notes, Internet ads could help the labels rebound from the 45% plunge in U.S. album sales since 2000, cited by Nielsen SoundScan.

"The video used to be just a cost center," Jean-Bernard Levy, CEO of Vivendi, whose videos have been watched on YouTube more than 3.6 billion times. "We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn't get paid. Now it's becoming a profit center." Universal and Google executives are now asking the other major record labels -- Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp. -- to join their partnership.

Read the whole story at Bloomberg News »