Vevo is co-owned by Universal Music Group, Sony Music, and Abu Dhabi Media. Vevo will be powered by YouTube’s technology and they will be sharing ad revenue with each other. Vevo will be launching officially on December 8.

Abu Dhabi Media Company bought a stake in Vevo and the funding round is rumored to give the company a $300 valuation. Sony and Universal Music both own stake, but Google does not. Google is on a revenue-sharing agreement with Vevo by providing the YouTube massive distribution platform. The full press release is available after the jump.

VEVO PARTNERS WITH ABU DHABI MEDIA COMPANY

Abu Dhabi Media Company Joins Universal Music Group and Sony Music Entertainment
for World Class Online Premium Music Service

New York, New York, Monday, October 19, 2009…VEVO, the new premium music video and entertainment service powered by YouTube, has received a strategic investment from Abu Dhabi Media Company (ADMC), one of the world’s fastest growing, multi-platform media organizations. The announcement was made today by Doug Morris, Chairman & CEO of Universal Music Group and Co-Chairman/Founder of VEVO, Rolf Schmidt-Holtz, Chief Executive Officer of Sony Music Entertainment & Co-Chairman of VEVO, Rio Caraeff, President & Chief Executive Officer of VEVO, H.E. Mohamed Khalaf Al Mazroui, Chairman of ADMC, and Edward Borgerding, Chief Executive Officer of ADMC. Terms of the agreement were not disclosed.

With this transaction, VEVO is now formed as an independent and fully funded entity with Universal Music Group (UMG), Sony Music Entertainment (SME) and Abu Dhabi Media Company (ADMC) as founding shareholders. Funding from the shareholders will enable VEVO to come to market with an attractive premium music offering for consumers and advertisers alike.

Launching in the United States and Canada later this year with a further international roadmap to be announced, VEVO will be a premium destination and syndication network for the very best in top-notch music video content that will leverage the massive existing traffic of YouTube.

“This global partnership flags Abu Dhabi Media Company’s commitment to establish a leading position in the digital media industry. It is part of an integrated approach to expanding the global digital presence and brand portfolio of Abu Dhabi Media Company, and it illustrates our partnering approach with innovators in digital media services and technologies”, stated H.E. Mohamed Khalaf Al Mazroui, Chairman of ADMC, on joining UMG and SME to create VEVO.

“It’s a credit to the music community, and to the global opportunity that VEVO represents, that we have been able to attract such a solid investment partner with the vision and track record of Abu Dhabi Media Company,” commented Rio Caraeff, President & Chief Executive Officer of VEVO. “Abu Dhabi Media Company brings to the venture important funding support and a team with enormous global media experience and insight, and we look forward to working with them to seize the many opportunities ahead of us.”

“Consumer demand for music video entertainment is growing significantly today and is transforming the digital entertainment market and the music industry by fuelling new media business models. VEVO fits our vision and goals perfectly, as we are expanding our capabilities and continue to build the market for digital entertainment around the world. VEVO will redefine the way premium music video entertainment is consumed, created and shared in a global community of music audiences,” said Edward Borgerding, Chief Executive Officer of Abu Dhabi Media Company

“We’re now entering a new exciting phase in the digital media industry in the region and we’re determined to be at the forefront of it”, added Ricky Ghai, ADMC’s Executive Director, Digital Group. “With VEVO there’s real opportunity for incredible growth, as both brand advertisers and consumers are looking for new premium video experiences online.”

YouTube will be providing the technology and back-end for the website while Universal Music will provide the content.  Sony Music is also on board with Vevo, but it is Warner Music and EMI have kept their distance thus far.  Rio Caraeff is currently the CEO of Vevo.  Vevo will make money from the advertising banners and text laced throughout the website.  Since the quality of video will be higher, Vevo hopes to have higher advertising rates than YouTube. About 40 people are being hired to work for Vevo.

Vevo will be based on of New York City and Los Angeles.  The company has been hiring engineers over the last several months.  As of right now, it is unclear whether EMI and Warner will join the venture.  As for Warner Music, CEO Edgar Bronfman has spoken against the idea publicly.

I would not be surprised if other labels jump on the opportunity to work with Vevo in the near future.  Hulu has proven to the world that web video could replace television just like it could do with music television. Vevo can be followed on Twitter.com/Vevo.

This deal is a major boost for YouTube because the video website is getting pressured to find additional revenue streams and is taking a lot of flack for not being able to pay fees for the rights to use their music and music videos.

Vevo will be wholly owned by Universal and it will feature higher quality videos than what is seen on YouTube itself. “The rationale is to help make Vevo a place that brands feel more comfortable,” stated Rio Caraeff, EVP of Universal’s eLabs division.

Universal hopes that Vevo will be comparable to Hulu.  Vevo will syndicate videos through their platform called Vevo Music Network.  Universal is planning to partner with EMI and Sony Music Group who have already renewed their contracts with YouTube.  Partnering with Warner Music Group will be slightly more challenging because they have not been able to make a deal with YouTube in the past.