Plans under discussion include a partnership with Hulu, the online television and film joint venture between News Corp and NBC Universal; the creation of a premium service on YouTube, Google's video-sharing site; or a standalone venture between some or all of the four largest recorded music groups.
Industry members had hailed deals struck with YouTube last year as a way of driving profits from the popularity of professional music videos and from offering them as soundtracks to amateur efforts on such usergenerated content sites.
However, some are questioning whether either side has made much money from arrangements that require YouTube to share advertising revenues and, in many cases, pay a few tenths of a cent to the music company each time a video is streamed.
Universal Music, the industry leader, has said it makes "tens of millions of dollars" from YouTube.
Warner Music failed last week to agree a new deal with the site, however, saying it was not being adequately compensated and demanding that the site take down its artists' videos and amateur content using songs from its publishing arm such as "Happy Birthday To You".
Representatives of two music companies, who would not be named, said they were in discussions with Hulu. They said no announcement was imminent but that the site appeared to be the favoured partner.
Both said, however, that any deal to create a standalone music video service would not replace existing deals with YouTube and that there was interest in supplying content for a potential premium service on YouTube, which has begun to offer high-definition videos. Warner may yet return to YouTube should it agree new terms.
The industry's search for digital income comes amid collapsing compact disc sales, which have not yet been offset by digital revenue growth. Warner, the only quoted music company, reported 39 per cent growth in digital revenues for 2008 to $639m, or 18 per cent of total sales.
By Andrew Edgecliffe-Johnson in New York
Financial Times
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