Google Inc. and YouTube Inc. on Monday reported signing licensing agreements with major recording labels to stream music video content from their respective Web sites.
Later this month, Google plans to begin distributing songs from both Sony BMG Music Entertainment, Warner Music Group Corp. Ads will accompany the free-to-stream videos on the Google Video site.
Later this year, any business taking part in Google's AdSense advertising program will have an option to post music videos on their site for free.
The deals are interesting in light of rumors that surfaced Friday that Google was interested in buying YouTube. While negotiations were said to be ongoing, Google could reach an agreement to acquire YouTube for $1.6 billion as early as Monday, announcing the deal at the close of the stock trading day, the newspaper reported.
Merrill Lynch analyst Justin Post gave thumbs up to the potential merger deal in a research note, suggesting the agreement would enable Google to capture additional search and video ad revenue.
Entertainment industry executives perceive the advertising model offered by both Google and YouTube as viable, said Steve Gordon, author of "The Future of the Music Business," and entertainment attorney.
"You're seeing more record labels and movie studios coming around to technology because of the model to share ad revenue with Internet sites," he said. "It's a new development that wasn't around during the initial days of music sites Napster and Kazaa."
Gordon said Internet companies Google, YouTube and a few others have reached common ground with traditional broadcast, movie and music companies.
YouTube also said it will begin distributing content from Sony BMG and Universal Music Group. The video hosting site also said it has struck a deal with CBS Corp.
Content will come from CBS TV, Showtime and CSTV. It will include short-form programming, such as news, sports and entertainment.
YouTube and CBS will share revenue from advertising sponsorships of CBS Videos.
CBS also will test new technology from YouTube that will help the network find and remove copyright content on the site.
YouTube announced a deal with NBC in June to promote its fall lineup of TV shows. The TV network would create an official NBC channel that would include a "Fall Preview" area.
The channel would also promote other programming, such as "Saturday Night Live," "The Office," and "The Tonight Show with Jay Leno."