Warner Music Group and YouTube are finalizing an agreement that would allow music videos from artists such as Madonna and Green Day to once again be featured on the popular web site, according to sources close to the deal.

The deal, which one source described as imminent, would resolve a dispute over licensing rights that caused Warner Music to pull music videos by its artists from Google Inc's YouTube in December.

YouTube and Warner, the third largest music company, declined comment on the deal, first reported by AdAge on Monday.

A deal would mean that Warner Music's stable of artists would once again appear on the world's most popular video sharing site, joining those from EMI Music, Sony Music Entertainment and Universal Music Group, all of which have renewed deals.

Financial details are unclear; but Warner Music Chief Executive Edgar Bronfman has made known his desire to improve terms of his previous deal with YouTube. Like other industry executives, he faces a music market that has been stung by tumbling CD sales and slowing digital music growth.

The deal would also open the door to a possible role for Warner in a new music video website called Vevo, which is backed by Universal and Sony and will be supported by YouTube's technology platform.

At the moment, talks about Warner joining Vevo are still in early stages and could break down over a range of issues, one source said. The source declined to be named because of the sensitive nature of the discussions.

Music industry insiders say that Web videos are catching up with radio and music television as one of the most important music discovery tools for fans.

They say Vevo would create a more sophisticated way to experience music on the web, describing a site that would be the music industry's version of Hulu, the popular U.S.-based online TV service backed by NBC Universal, News Corp and Walt Disney Co.

Former Universal Music digital chief Rio Caraeff was appointed as Vevo's top executive earlier this summer. The venture has held talks with major advertisers and deals with at least four big brand names are expected to be ready in time for its debut later this year.

(Reporting by Paul Thomasch, editing by Gerald E. McCormick)

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