loses Warner Music Group content

WMG pulls artists; new agreement is negotiated

NEW YORK -- Warner Music Group has pulled its music from's free on-demand music streaming service in an apparent dispute over compensation rates. began removing Warner artists from its service this week at the label's request, according to a source familiar with the situation.

In a statement, parent CBS said, "We are currently negotiating a new agreement with Warner Music Group and are working hard to build the most comprehensive music service on the Web."'s on-demand service still carries music from Universal Music Group, Sony BMG Music Entertainment, EMI Group and other labels. In addition, songs by Warner artists can still be heard through's Internet radio service. has been one of a growing number of online services to offer consumers free, ad-supported access to music with the blessing of the majors. CBS acquired in May 2007 for $280 million.

In February 2007, Warner became the first major to sign a content deal with In recent months, the label had been continuing to provide music to the site on a month-to-month basis.

But since joining, Warner had grown increasingly disenchanted with the service's compensation rates, a source familiar with the situation says, arguing that they were "completely out of whack" with competing services like imeem and News Corp.'s forthcoming MySpace Music joint-venture music service with Warner, Universal and Sony BMG.

Moreover, Warner has been frustrated by's failure to proceed with its plans to launch a music subscription service, the source says.

Warner owns equity stakes in imeem and MySpace Music, but not