Major record label Warner Music is pulling its videos off the video-sharing site YouTube out efforts to reach a new contract proved unsuccessful.

After search-engine giant Google bought YouTube, started by three American college students, for $1.65 B in 2006, Warner was one of the first entertainment labels to start offering content on YouTube.

Warner currently displays hundreds of thousands of videos from its artists ranging from Madonna to Led Zeppelin. Warner also provided special behind-the-scenes content of its artists.

But all of those videos will be moved shortly if a last-minute efforts falls through as well.

The dispute is over royalties, and Warner is unsatisfied over YouTube’s terms. “We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide,” a company spokesman man said. He added that Warner was “working actively” to find a last-minute solution.

Although it made its name though user-generation content, YouTube is seeking to also establish itself as the base for online official media as well. Thus far YouTube, which pioneered online video sharing, is behind the NBC-Fox jointly owned site Hulu; which features hundreds of movies, shows, and other official content from the two media giants in a user-friendly format and perfect video-quality that makes YouTube look second-rate. YouTube has recently signed a deal with legendary Hollywood studio MGM to start offering full length films from the studio’s archives.

Although Hulu is still significantly behind YouTube in web visitors, the NBC-Fox partnership shows that Big Media can still outplay young startups. The ability of such firms to establish their own formats, which Warner might do, instead of relying on YouTube threatens the aspirations of this Google subsidiary to become a dominant player in the online world of music and movie screening.