YouTube blocks music videos in Britain

YouTube is blocking thousands of music videos to British users after failing to reach a new licensing agreement with the Performing Rights Society (PRS), which collects royalties for songwriters.

The move on Monday has angered the PRS, which says YouTube — bought by Google in 2006 — is "punishing British consumers and the songwriters whose interests we protect and represent."

Steve Porter, head of the PRS, said he is "outraged" and "shocked" by the move.

His group released a statement condemning YouTube's tactics:

"Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing. This action has been taken without any consultation with PRS … and in the middle of negotiations between the two parties."

Patrick Walker, the director of video partnerships at YouTube, said the action was "regrettable" but added the PRS is seeking much higher fees, which were "prohibitive."

YouTube pays a licence to the PRS, which allows the site to stream music videos from three major music labels and several independent ones.

"We feel so far apart that we have to remove content while we negotiate with the PRS," Walker said on BBC News.

He said the rates that the PRS was seeking would result in YouTube losing "significant amounts of money on every stream of video."

YouTube is the world's most popular video sharing website.

The dispute between YouTube and the Performing Rights Society for Music that prompted the website to remove music videos could spread to MySpace UK and other music sites, industry sources said.

MySpace UK and other sites are struggling to renegotiate their own licences with PRS, which pays royalties to artists.

One source close to the negotiations said that the launch of MySpace UK's comprehensive music service later this year could be thrown into jeopardy unless it secured an economically viable licence with PRS.

"A lot of service providers are negotiating and renewing licences with PRS right now, but the rates are widely known to be uneconomical," said the source. "Nobody could run an online business on those terms."

The streaming service Pandora was forced to cut off its service for UK users on 15 January after it failed to renegotiate its licence with PRS. Imeem, which reportedly received $15m in funding from Warner Music last year, and RealNetworks are also understood to be renegotiating.

Meanwhile, YouTube and PRS are due to meet in London this afternoon and both say they are determined to resolve the deadlock.

PRS is understood to be basing its royalty claims on the results of the 2007 UK Copyright Tribunal, but the source said the rates PRS were demanding were so high that a free-to-view, advertising-based service would not be able to charge advertisers enough to cover the royalty payment on each video.

YouTube, which started to remove videos last night, repeated its claim that the rates are not sustainable except for sites that charge subscription access.

"However, we want to share the revenue generated from music videos on YouTube with the music industry," said a spokesman. "But at the rate set by the Copyright Tribunal - which is the rate PRS is seeking - YouTube would be losing money with each stream.

"It's simply unsustainable for our business."

A PRS spokeswoman said the ultimate aim of the talks were to come to an agreement, while YouTube said withdrawing videos from UK users was "not a breakdown in talks, but something that had to happen for talks to continue".