Warner said YouTube's terms did not 'fairly compensate' performers or labels
Warner Music Group has told YouTube, the video sharing site, to remove music videos by its artists from the site.
Contract negotiations have ended because Warner wanted more money for having its music on YouTube.
But the Warner channel was still available on YouTube on Monday and Warner is reportedly still keen to reach a settlement.
The original 2006 deal was hailed as a landmark agreement, paving the way for deals with other music publishers.
YouTube also has deals with Universal Music, Sony and EMI Music. Analysts say that Warner's action may prompt other music companies to demand more money.
Thousands of videos from artists such as Madonna, Red Hot Chilli Peppers and Kid Rock, could now be pulled from the site.
The original deal allowed Warner's material to be used legally on YouTube in return for advertising revenue.
Music companies typically get a share of advertising revenue associated with each video and a per-play payment - estimated to be a fraction of a penny - for every video viewed.
"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.
Sources close to Warner said the amount it received from YouTube was "staggeringly low".
In a statement on the YouTube blog, the company - which is owned by Google - said: "Every day we work with the music community to license your favourite music for you to use on YouTube. But music licensing is very complicated.
"Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners. For example, you may notice videos that contain music owned by Warner Music Group being blocked from the site."
The video sharing site added that its ultimate goal was "to treat everyone fairly".
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