The following answer is given by a fellow Reddit user “extuber“. It is put here so that the people who do not use Reddit and miss the beautiful part of Internet.
So, What is VEVO ? and What VEVO does?
Youtube/Google was in danger of being sued by Sony Music/UMG music. To prevent a potentially devastating lawsuit, Google’s CEO (at the time) Eric Schmidt made a deal with Doug Morris, CEO of Sony Music, to build a parallel video platform based on YouTube’s technology, where Sony could control the monetization settings and sell their own ads.
Vevo V1 was basically a shell website that hosted an embedded YouTube player which in turn loaded Vevo’s own ad module at runtime. This allowed YouTube to keep the music video content, provided a link was present to the ‘official’ Vevo page (effectively, a rebranded YouTube page.) The videos were/are still hosted on YouTube but basically now YouTube or we can say Eric Schmidt prevented a costly lawsuit in a quite clever way.
Source: “extuber” was a YouTube software engineer who worked on the Vevo launch.