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Since MTV started in 1981 with “Video Killed the Radio Star,” record labels have treated videos as a marketing expense. Now, with album sales plummeting, music companies aim to make them a source of profit.

That’s the goal of Universal Music Group’s venture with Google Inc.’s YouTube. Vevo.com, a new site announced last week, will stream videos from artists such as U2, Beck and the Rolling Stones. YouTube will then split advertising revenue with Universal, the world’s largest music company.

The agreement is a sign of progress in the record industry’s efforts to make money from YouTube, the biggest online video service. Internet ads could help the labels rebound from a 45 percent plunge in U.S. album sales since 2000, according to Nielsen SoundScan. Working with YouTube also may let the industry rein in the wild-west nature of online music.

“As an industry or a company, we have to figure out how to derive some sort of revenue from the consumption of music, whether or not people buy it,” said Rio Caraeff, executive vice president of Universal Music’s ELabs, which handles its e- commerce strategy.

Over dinner earlier this year in Paris, U2 singer Bono urged Universal Music Chairman Doug Morris to get in touch with Google Chief Executive Officer Eric Schmidt about working together, according to a person with knowledge of the talks.

Giving Away

The revenue-sharing plan is a shift from the 1980s and 1990s, when videos from artists such as Bon Jovi, Madonna and ‘N Sync were given free to MTV for marketing purposes. With album sales falling, music stores closing and MTV moving to a reality-television format, videos need to start paying for themselves.

New York-based Universal, owned by France’s Vivendi SA, says its videos have been watched on YouTube more than 3.6 billion times.

“The video used to be just a cost center,” Jean-Bernard Levy, CEO of Vivendi, said in an interview last month. “We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn’t get paid. Now it’s becoming a profit center.”

Universal and Google executives are asking the other major record labels to join their partnership. That includes Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp.

Jeanne Meyer, a spokeswoman for EMI, said talks with YouTube are at a “very early stage.” Warner Music’s Will Tanous declined to comment on the discussions. Claire von Schilling, a Sony spokeswoman, didn’t return a call seeking comment.

‘High Hopes’

YouTube also needs new ways to make money. The business will lose $470 million in 2009, according to Credit Suisse estimates. A deal with Universal could be a model for agreements with other content providers, allowing the Web site to charge premium ad rates for professionally made clips.

“We have high hopes we’re creating a sustainable, profitable business model,” David Eun, vice president of strategic partnerships at Mountain View, California-based Google, said on a conference call last week.

YouTube, famous for the low-budget videos posted by its users, is trying to add more premium content. Of the top 100 most-viewed video producers on YouTube, 39 are from musicians and labels, according to David Burch, a marketing manager with the video-tracking firm TubeMogul Inc. in Emeryville, California.

Lingering Disputes

Still, Google’s deal with Universal doesn’t resolve YouTube’s problems with other content providers. Warner Music Group, the first label to strike a deal with YouTube in 2006, pulled its videos in December when a new licensing agreement couldn’t be reached.

Disputes with artists in the U.K. and Germany forced clips in those countries to be pulled. Viacom Inc., controlled by Sumner Redstone, is suing Google for allegedly not removing copyrighted material from YouTube.

“Historically, every new medium has required that this kind of battle happen,” said Aram Sinnreich, an analyst with Los Angeles-based Radar Research.

The negotiations are complicated by the lessons of MTV. As CD sales fell, it became apparent that the decision to allow videos to air on the cable channel without payment was a mistake, said Steve Gordon, a New York attorney. The author of “The Future of the Music Business,” Gordon specializes in music licensing.

Change in Policy

Record labels also have viewed radio as a marketing expense — something that may be changing. Universal Music, Sony and Warner are lobbying lawmakers in Washington to make radio stations pay royalties for playing their songs. The effort could cost broadcasters an estimated $2 billion or more.

“They learned something from the MTV experience, but perhaps they learned it too well,” Gordon said in an interview. “Instead of giving something away for free, now they are charging too much.”

Vevo will try to attract advertising dollars by creating a one-stop portal for videos. In addition to videos, users will be able to purchase digital tracks and merchandise. The site could eventually be expanded to add other interactive features, such as games like “Guitar Hero,” made by Vivendi’s Activision Blizzard Inc., said Universal’s Caraeff.

Vevo follows an online project by television companies called Hulu.com, which distributes NBC and Fox shows for free. Vevo’s success will depend on whether the other major labels take a stake in the site, creating a true clearinghouse for online music, Sinnreich said.

“It needs to have content from other providers,” he said. “If Universal and Google are willing to share equity, I don’t see why other major labels wouldn’t want to consider coming on board.”

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Brian Womack in San Francisco at

Twins Cassie and Shannon Shankman may be teenagers, but they’re already experienced business owners.

They launched the International Music Academy as freshmen. Now juniors at Carroll Senior High School, the 17-year-olds spend several hours a week giving private music lessons to area children.

The home-based school provides instruction in violin, voice, music theory and piano. During the summer, they offer music appreciation classes for toddlers.

This year, a $1,000 scholarship has been established in honor of the girls’ mother, Cheryl Shankman, an educational advocate and volunteer who died in November. An avid traveler, she had lived in Japan and Europe.

Offered by the Carroll Advanced Placement Boosters, the scholarship will help a Carroll High School sophomore or junior participate in a district-sponsored travel-abroad program. Shankman was a past president of the group. The application deadline has been extended to Saturday.

When the twins were in fourth grade, the family moved to London, where the girls attended an American school for about three years. Back in the United States, the girls started giving music lessons and later joined the Southlake Chamber of Commerce to work with other business owners.

What was it like living in England?

Cassie: That was a great experience, being with different cultures, different types of people and being exposed to different types of activities. We grew up there.

Tell me about your business.

Cassie: In London, we were learning a method of piano different than the American system. We combined the American and European systems. It’s a curriculum we put together ourselves. We wanted to have a job, and we wanted to work for ourselves instead of working for someone else. We set our own wages, and we can have holidays off. It is neat to see other kids learn your method, expand on it and share it with others. There are different languages throughout the world, but one thing that brings people together is music.

What do your students think about being taught by people close to their own age?

Shannon: They find it more cool, and they feel more open. We gradually developed a method to make it fun. We didn’t want them to have homework, so they go home and play whatever they want. They will more likely do it if they don’t think they’ll get in trouble for it if they don’t.

Why did you join the chamber?

Shannon: It was given to us as a present from our mom. It was such an honor. We got involved because everybody is so nice and so helpful. She wrapped it [a plaque] up under the Christmas tree.

Did you have a ribbon-cutting?

Shannon: Yes, we did a ribbon cutting March 15, 2006. There were businesspeople, friends there. It made us feel it was official. We felt valid. It felt more grown-up.

It’s an interesting gift to give teen girls.

Shannon: It’s a typical mom gift. She wanted us to help others and give us one more step into the adult world. This is something you don’t usually get. It felt like, now we’re part of something greater than ourselves. She gave us the gift of helping others.

What do you think about the travel scholarship in honor of your mother?

Cassie: It is because our mom really loved traveling. She loved different cultures, exploring

Blues and Beale Street have attracted visitors to Memphis for decades. But for some, a trip to Memphis is more than just a vacation; it’s a pilgrimage to pay homage to the birth of rock ‘n’ roll. They come to explore the complex history of Memphis music and the culture from which it grew at the triumverate of the city’s music-themed museums: Graceland, the Rock ‘n’ Soul Museum and Sun Studio.

Graceland

Fascination with Elvis Presley’s classic American rags-to-riches story has inspired thousands of fans from all over the world to take the audio-guided tour of Graceland numerous times. Some seem to know every inch of the rock ‘n’ roll icon’s 14-acre estate. The famed jungle room with its over-the-top, Hawaiian-inspired decor and the TV room with the thunderbolt prominently painted on the wall are as familiar as a favorite Elvis song.

Now something new looms on the Graceland horizon. Devoted Elvis fans are all shook up over three new exhibits now on view featuring the most extensive display of never-before-seen memorabilia since Graceland opened in 1982.

> “Elvis in Hollywood” charts Elvis’ rise on the big screen and represents all 31 movies he made during his career. The denim jacket he wore when he rocked out in the 1957 film “Jailhouse Rock” is on display as well as costumes from “Viva Las Vegas” and other box-office hits. Movie scripts with Elvis’ handwritten notes and rare behind-the-scenes photos are a favorite portion of the exhibit for many fans.

> “Elvis Lives: The King and Pop Culture” reflects on the lasting impact Elvis had on pop culture in America and around the world. Anyone who ever carried an Elvis lunchbox to school will get a kick out of the kitsch Elvis memorabilia.

> Additions to the Elvis Presley Automobile Museum at Graceland include a never-before-seen 1960 black Rolls-Royce and a 1969 Mercedes limousine featured in the 1972 film “Elvis on Tour.”

Sun Studio

At Sun Studio, Elvis fans can stand in the same spot where their idol recorded his first hit, “That’s All Right (Mama),” with legendary record producer Sam Phillips. The single that launched his career was born by accident when 19-year-old Elvis was auditioning for Phillips. After hearing Elvis sing several country ballads, the producer was underwhelmed by the unknown teen’s talent. To blow off steam during a break, Elvis grabbed his guitar and started clowning around singing “That’s All Right (Mama),” a blues song first recorded by Arthur Crudup. That was when Phillips knew he had found the fresh, funky sound that would turn the music industry on its head.

Elvis wasn’t the only music legend to get a start at Sun Studio. Johnny Cash, Carl Perkins and Jerry Lee Lewis also cut chart-topping hits here. In fact, the biggest hit ever produced at Sun was not an Elvis record. It was Jerry Lee Lewis’ 1957 sensation “Great Balls of Fire.” More recently, U2 recorded the album “Rattle and Hum” at the studio.

Rock ‘n’ Soul Museum

The Rock ‘n’ Soul Museum traces rock ‘n’ roll to its roots in blues, country and gospel and shows how the sound evolved over the years. Without the confluence of black and white musical styles in Memphis in the early 20th century, there may not have ever been an Elvis.

Through its Smithsonian Institution exhibition, the Rock ‘n’ Soul Museum explores how many musical pioneers overcame racial and socioeconomic barriers in the segregated South, bringing about not only a musical revolution but a cultural one as well.

A popular exhibit tells the story of Memphis radio station WDIA, the first black-formatted station in the country. It’s where a popular radio announcer, Riley B. King, sang and spun records. His on-air name, “Beale Street Blues Boy,” was later shortened to “B.B.” He has been known as B.B. King ever since.

There’s no doubt the king of rock ‘n’ roll was influenced by the king of the blues. In the 1950s and ’60s white teenagers, including Elvis, started tuning in to WDIA, preferring the raw, rough-edged sound to the “white” music on other stations. Elvis’ style was so shaped by talented black musicians that when his first single, “That’s All Right (Mama),” was played on Memphis radio station WHBQ, many listeners assumed he was black.

IF YOU GO

Graceland. Open daily, hours vary. $32-$27 adults, $29-$24 seniors and students, $15-$10 children 7-12. 3765 Elvis Presley Blvd., Memphis. 1-800-238-2000, www.elvis.com.

Sun Studio. 10 a.m.-6 p.m. daily. Tours are every half-hour from 10:30 a.m. to 5:30 p.m. $12 adults, free for children 4-12; children younger than 4 not admitted. 706 Union Ave., Memphis. 1-800-441-6249, www.sunstudio.com.

Bay Area natives probably can recall their first show at the Fillmore, one of San Francisco’s most famous music halls and the site of performances that span generations of music – from Jimi Hendrix to The Roots. These days, music fans might go to Potrero Hill’s Bottom of the Hill club, the Tenderloin’s Great American Music Hall or Cafe du Nord in the Castro.

Those venues could be forced to close, owners say, if the state Department of Alcoholic Beverage Control, better known as ABC, continues to impose rules that club attorneys argue are legally questionable and often unrelated to booze or safety issues.

Some of the clubs say they only recently learned about the new rules, which are not written into state law and haven’t been enforced in the past.

For example, ABC has decreed that at least half of the clubs’ revenue must come from food sales. The agency also is taking issue with minor operating changes, such as one club’s decision to open an hour later.

In almost every case, the San Francisco clubs who have been battling ABC have the support of neighbors and local leaders.

ABC officials, meanwhile, won’t comment on most pending cases but insist that they are not overstepping their authority. A spokesman said the agency is taking appropriate action to protect the public.

Yet the ABC rules have some in the industry worried about where local bands will get their first break and where young people will go to experience live music if the clubs cease to exist.