YouTube in the UK is to be stripped of its most popular music videos after the site failed to agree a new licensing deal with the Performing Rights Society for Music, the trade body that collects music royalties.

YouTube said today that after the expiry of its former deal, PRS had proposed new payment terms that would be financially prohibitive for the site and would require YouTube to pay out more than it makes from the ads next to each video.



YouTube says it will help find the next Arctic Monkeys. Photograph: Frida Borjeson Photography/Flickr/Some rights reserved

It also said that PRS would not agree to identify which artists and songs are covered by which licence, something essential for YouTube's content ID system to identify and reimburse rights holders for each song that is viewed.

"We value the creativity of musicians and song writers and have worked hard with rights-holders to generate significant online revenue for them and to respect copyright," said parent company Google in a statement.

"But PRS is now asking us to pay many, many times more for our licence than before. The costs are simply prohibitive for us - under PRS's proposed terms we would lose significant amounts of money with every playback."

Google said it is still negotiating with PRS but in the meantime, premium videos from artists on EMI, Universal, Warner and Sony BMG and some indie labels have started to disappear for UK viewers and will be systematically removed over the next few days. YouTube's has separate deals with the major labels who control the sound recording rights but PRS controls licencing for the music and lyrics, without which live or pre-recorded songs cannot be performed.

Patrick Walker, YouTube's director of video partnerships, said he couldn't give a figure for the proportion of site traffic generated by music videos, but that music videos are some of the most popular content on the site and generate a lot of activity including remixes and on music blogs.

"This is about long-term viability," he said. "If the next Arctic Monkeys is going to surface we need to get this to work. It's in the interest of the music industry - we're not just doing this for us. The record industry needs a new business models so it's kind of a shame that this has happened. But sometimes you have to step back to step forwards."

PRS said today that Google's announcement was made without any consultation and in the middle of negotiations, and that it is "outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the UK".

But it also appeared to contradict Google's claim that PRS had asked much more money for the new licence, saying the tech giant wants "to pay significantly less than at present to the writers of the music on which their service relies".

"We were shocked and disappointed to receive a call late this afternoon informing us of Google's drastic action," said PRS chief executive Steve Porter. "... which we believe only punishes British consumers and the songwriters whose interests we protect and represent."

Clearly pre-empting the fury of YouTube users, PRS emphasised that it did not ask YouTube to remove the videos and "urges them to reconsider their decision as a matter of urgency".

But even if PRS is completely squeaky clean in this episode, it comes soon after the closing days of the Pirate Bay trial and for web-savvy consumers it will confirm the gulf between the traditional music industry and the technology they love.

It also follows some bad press for PRS over licence chasing; PRS has allegedly been pestering small businesses demanding licences if, for example, they have more than two staff and listen to the radio.