YouTube for its part will provide the needed technology to run the service and will also host the videos on its own site, where they'll be housed in a Vevo channel via an embedded player. All parties involved will share revenue for advertisements shown on both Vevo and YouTube. After the new service gets off the ground, the companies could also allow other labels access to the site, becoming a Hulu of sorts for music related content.
YouTube is pursuing licensing deals on a number of other fronts as well to complement user-posted videos that are less attractive to advertisers. It's reportedly in talks with Sony to license feature-length films, and with CBS to get distribution rights for its current TV shows.