• Reuters, Monday, December 22, 2008 11:30 AM

In another setback for Google's popular video sharing site, Warner Music Group over the weekend ordered YouTube to remove all music videos by its artists after contractual negotiations broke down. According to Reuters, Warner's decision could affect hundreds of thousands of video clips. Talks broke down early Saturday because Warner wanted a bigger share of ad revenues. "We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide," Warner said in a statement.

According to comScore, YouTube had more than 100 million viewers in the U.S. in October, making it the most popular destination for online video by a massive margin. Warner became the first major media company to negotiate a deal with YouTube in 2006. As part of that deal, Warner, Universal Music Group and Sony Music each took small stakes in the online video giant prior to Google's acquisition in 2006, profiting from its close.

The music companies were to be paid a share of any advertising revenue associated with their catalog of artists as well as a per-play fee for every video viewed, but according to a source familiar with the Warner-YouTube talks, the record label has received "staggeringly low" revenues from the deal. "Despite our constant efforts, it isn't always possible to maintain their innovative agreements," YouTube said in a statement on its blog. "Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners."

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