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On Saturday, Warner Music Group ordered Google, the present owner of YouTube, to remove from its site all music videos by its artists, after licensing negotiations broke down the previous day.

Warner said: “We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide,” reports Reuters.

Warner Music, home to many artists including the Red Hot Chili Peppers, Madonna and Metallica, has been in long negotiations with YouTube on how best to split revenues until things came to a halt in talks on Friday.

The music companies get paid a share of advertising revenue associated with their videos and a per-play payment for every video viewed. The per-play fee is usually a fraction of a penny and with millions visiting YouTube everyday it was expected to add up to a substantial amount. But Reuters reports that Warner Music said the amounts it has been receiving from YouTube were “staggeringly low”.

The order could affect hundreds of thousands of videos clips, as it covers all Warner Music’s recorded artists. YouTube also has agreements with Vivendi’s (VIV.PA) Universal Music Group, Sony Music Entertainment and EMI Music, so Warner’s move could see the others also making tough demands for higher fees.

What is “staggeringly low” for the music industry? Perhaps the internet business models don’t allow for the compensation the industry is used to. Will any artists protest the action?

Source: Reuters, Slashdot