Universal Music plans to pursue YouTube and MySpace over claimed copyright violations.
Company CEO Doug Morris said yesterday that both sites are abusing copyright because their users can post music videos and other content from the company's artists.
He reckons the two popular sites owe Universal "tens of millions of dollars", adding, "how we deal with these companies will be revealed shortly".
Universal had been in talks with YouTube with a view to working out a legal way forward, but these discussions have collapsed.
The company will file suit against the online services at the end of the month, if settlement isn't reached, claims Mercury News.
Until now, labels have been quietly embracing both services as ways to promote their artists to a wider web-savvy audience.
Label A&R men nowadays like to see a successful MySpace page for a new artist, arguing that it means an audience has already been created for the act they want to sign.
The report explains that Universal now wants to get paid for use of the content it once regarded as promotional.