The major label is launching a new label called All Def Music, which will focus on signing, developing and promoting musicians on Google's video service.
UMG is working with entrepreneur Russell Simmons, veteran hip-hop executive Steve Rifkind, and Brian Robbins, founder of children's YouTube network AwesomenessTV, which was acquired by DreamWorks Animation for a reported $33m earlier this year.
All Def Music will launch in the third quarter of 2013 with Rifkind as its president and chief executive. It's effectively UMG's answer to the wave of multi-channel networks (MCNs) on YouTube like Maker Studios, Fullscreen and Base79, which include a number of musicians on their rosters.
All Def Music will rely partly on All Def Digital, an MCN launched by Simmons and Robbins earlier this year with funding from YouTube. The company also manages emerging artists, among them poet/musician Spoken Reasons, who has more than 1.3m YouTube subscribers already.
"The exponential growth of Internet-based video has created a powerful new outlet for music and music-based content," said UMG chairman and chief executive Lucian Grainge in a statement.
"The launch of All Def Music is a part of our broader strategy to partner with some of the most experienced entrepreneurs in media and technology to identify future stars and develop powerful content on the world's fastest growing media platform."
The label sees Simmons return to the Universal fold, having founded hip-hop label Def Jam, which became part of UMG in 1998 as part of a wider merger, and is now part of its Island Def Jam subsidiary.
"I look forward to working with the extraordinary talent from the vastly creative YouTube ecosystem in the same way I've worked with musicians, poets, comedians and designers all my life," said Simmons.
YouTube has already spawned a number of music stars. British singer/songwriter Alex Day has more than 708,000 subscribers to his channel, which has generated more than 116m video views, for example.
In 2011, Day sold 100k downloads to reach number four in the UK's Christmas-week singles chart.
Meanwhile, British bass-music brand UKF has 4.4m subscribers for its UKF Dubstep channel, which has racked up more than 1bn total views since its launch in 2009.
Traditional record labels are also finding new income streams from YouTube. Indie label Cooking Vinyl said in January 2013 that it was earning up to $5,000 per million views on the service, with its YouTube revenue having more-than doubled between February and November 2012.
"We're anticipating YouTube becoming our most important revenue stream in the future," said the label's digital distribution manager Richard Leach at the time. It remains to be seen whether Universal Music Group's new venture can help the major label group towards a similar goal.
guardian.co.uk © Guardian News and Media Limited 2010