YouTube and VEVO's long-standing contract expired on December 9. VEVO offers music videos from three of the four biggest record labels, and is a premium partner of YouTube.
As Digital Spy reported citing Billboard, VEVO is looking to increase the ad revenue share it currently earns from its videos on the service.
Currently the ad share for VEVO is somewhere between 51% and 75% minus a 10% sales commission.
YouTube is unwilling to increase the deal offered to VEVO, even though VEVO videos from the likes of Adele, One Direction and Lady GaGa are some of the most viewed on the site.
A 120-day automatic extension means the contract will stay in place until early April, giving both sides time to arrange a new deal.
However, Sony Music boss and VEVO founder Doug Morris has said that VEVO would consider taking its content elsewhere.
Earlier in the year it had been rumoured that Facebook was poised to take over from YouTube as host for VEVO content - a rumour that resurfaced when Facebook integration was introduced as part of VEVO's recent site re-design.
The service announced last month that it has paid out over $200m in royalties to artists since its inception in 2009.