The internet is big business for many companies with ad revenues from traditional outlets like newspapers and magazines finding their way into the coffers of online companies. Record companies are working with massive websites like YouTube to grab their share of the revenue generated by content they own.

YouTube, the record industry, and Hollywood have a long history of legal battles and contract negotiations that have at times had certain music videos and other content being pulled from the popular YouTube website. YouTube currently has contracts with most major record labels that allow it to show music videos by the labels artists in exchange for share of the ad revenue generated by the videos and other fees.

YouTube and Universal Music Group are now reportedly in talks to possibly start a new music video site that would be a separate and premium location for music videos. Universal is the largest music company in the world and if negotiations between it and YouTube succeed we could see the other major music labels follow suit with music sites of their own.

Reuters cites three sources close to the negotiations that were not authorized to speak on the subject. One of the sources told Reuters, "UMG CEO Doug Morris came up with this idea to do a Hulu for music but only with premium music content. We literally just started negotiations."

According to the sources, the music site is being called Vevo for now, but that is said to be merely a placeholder name. The idea is that Vevo would be able to generate higher advertising rates through more focused content. The site would also be able to tie in other merchandise sales like albums, digital tracks and concert tickets say the sources.

YouTube is currently the top video site in America according to recent metrics released by comScore. The site now has over 200 million viewers according to the most recent data, a number massively larger than the second place video site.

YouTube has a tumultuous relationship with record companies and in December 2008, the site threatened to pull content from Warner Music over a contract dispute. Warner didn’t budge and content from its artists was later removed from YouTube.

YouTube is currently in negotiations with Universal to renew a contract that expires this month. A new contract is expected to be in place by April. EMI is also in negotiations and Sony Music renewed its contract last month with YouTube.

Reuters quotes YouTube from a statement saying, "We are always working with our partners to find creative ways to connect music, musicians, and fans."

Prior to the dispute with Warner YouTube was reportedly in talks with Universal Music for a site that would offer music videos from all major record labels. These negotiations have stalled pending a resolution with Warner.

ComScore says that in January there were a total of 14.8 billion videos viewed online and that 76.8% of the entire U.S. internet audience viewed an online video during the month.