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Google and Warner Music row threat to YouTube

Music videos from Madonna, rapper TI and rock giants Red Hot Chili Peppers and Led Zeppelin are among those that have started to disappear from YouTube after a row between the website’s owner, Google, and the record label Warner Music.

The dispute threatens YouTube’s emerging status as the MTV of the online age, one of the most popular places for music fans to find pop videos from current acts and from record labels’ vast back catalogues.

An uneasy ceasefire between YouTube and the music industry was first reached two years ago, but developments over the weekend raised questions about whether other major labels might also follow suit and have their artists removed from the site.

Warner is the third largest record label after Universal Music and Sony BMG. While it still hopes to sign a new deal with YouTube, it admitted talks had broken down. "We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide.”

The two sides are sparring over the fee that YouTube pays when videos are watched and the cut that the label gets from revenues generated by ads alongside music videos.

When YouTube was created in 2005 by two Silicon Valley twentysomethings, Chad Hurley and Steve Chen, it quickly became a popular place for users to share personal webcam footage, clips from TV shows and pop music videos. Many more made their own music videos for chart hits or used popular songs in the background to creative work.

Media companies and record labels reacted angrily, saying that their copyright was being breached. Indeed, Viacom – owner of the MTV and Comedy Central channels – is still suing YouTube for more than $1bn, claiming more than 1.5 billion copyright infringements.

YouTube was sold to Google for $1.65bn in 2006, after which most media companies agreed to halt lawsuits in return for fees or a share of advertising revenue when their clips were watched. Warner Music was the first of the major record labels to sign such an agreement, and many of its artists now have their own dedicated channels on YouTube. The company gets a fee of less than a penny each time a video is watched, or a percentage of the value of an ad alongside the video, whichever is the greater.

Talks on extending the deal have proved difficult, YouTube admitted on its blog over the weekend. “Despite our constant efforts, it isn't always possible to maintain these innovative agreements. Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners,” it said in a posting signed by “the YouTube team”.

It apologised to frustrated users, saying they will notice that some of their videos using Warner Music content would start to be blocked.