• by Mark Walsh  @markfwal, April 10, 2009

In its latest deal with a major media company, YouTube is partnering with Universal Music Group to launch a premium online music video hub later this year dubbed VEVO. The site will feature the label's catalog of top artists and serve as a model for alliances with other studios.

In addition to operating VEVO.com as a stand-alone site, there will also be a VEVO channel on YouTube that allows user-generated content. The deal will include ad revenue-sharing between YouTube and UMG on both properties.

"We're hopeful that this partnership will set a positive example of how the digital and music industries can work together," wrote Chris Maxey, YouTube's partnership director, on the company blog Thursday. YouTube parent Google is already in discussions with other labels about joining VEVO.

UMG and the other major labels already had deals to provide videos on YouTube, although Warner Music Group pulled its content from the site in December after failing to come to terms to renew its agreement.

The new UMG deal and VEVO highlights YouTube's recent efforts to incorporate more advertiser-friendly professional content into the site. Since last fall, the company has signed deals with the likes of CBS, MGM and last month, Disney for TV shows and full-length movies. Bloomberg on Thursday confirmed that Sony Corp. is in talks with YouTube to post movies on the site.

The studio deals have increased as YouTube comes under growing pressure to prove it can eventually become a profitable ad-supported business. A Credit Suisse analysis released last week estimated that YouTube could lose $470 million this year.

To date, only a fraction of its mostly user-generated material has carried advertising. According to an Advertising Agestory this week, that proportion is starting to grow as YouTube is selling ads on 9% of its U.S. video views compared to 6% a year ago.