YouTube is blocking most of its music videos from UK viewers after negotiations with British royalty collectors turned sour.

The Performing Rights Society (PRS) for Music, a group representing artists and publishers, and YouTube both blame each other entirely for the impasse, of course.

Patrick Walker, YouTube's top pact-maker in Europe said in a blog post today that the site will block all "premium" music videos in the UK until it can strike up a new contract with PRS that is "economically sustainable."

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

He also claims PRS is unwilling to even tell the video streaming site what songs are included in the licensing renewal being negotiated. Walker claims the deal is "like asking a consumer to buy an unmarked CD without knowing what musicians are on it."

PRS appears to have been taken off guard by YouTube's sudden yanking of content. Shortly after the site said it's pulling UK music videos, PRS chief Steve Porter announced he was "shocked and disappointed" to receive a call late in the afternoon informing him of YouTube's drastic action.

The music group claims YouTube wants 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."

PRS said YouTube's decision to block music videos in the UK was done in the middle of licensing negotiations, and urged the site to reconsider "as a matter of urgency." As a jab — apparently to show that YouTube should have plenty of money to spend on fees — PRS noted the site's parent company Google made $5.7bn in revenues in the last quarter of 2008.

The situation draws obvious parallels to how the automated streaming music service Pandora decided to block UK listeners in early 2008 because it couldn't afford a license with PRS and music labels. Pandora had attempted to work with copyright holders from the outset, as opposed to YouTube, which only more recently has been scoring licensing deals in an effort to generate more revenue.

But YouTube is the most popular online video streaming site out there — so it certainly begs the question of who can earn enough money in the biz if YouTube can't?

Yanking content off streaming sites appears to be an increasingly common negotiating ploy for both sides of the table. In December 2008, Warner Music Group began removing its videos from YouTube after claiming it wasn't getting enough cut of the profit. Apparently companies are betting customer outrage will spur the other side to bend to their demands. But when customers can get their content elsewhere easier (and often illegally, where nobody gets paid) the licensing e-tantrum can certainly backfire on both. ®