Warner Music and YouTube still talking on deal

* Warner now only major in U.S. without YouTube deal

By Yinka Adegoke

NEW YORK, July 20 Warner Music Group WMG.N, the world's third largest music company, is still in talks with video sharing site YouTube to license its artists' music videos even after all its major rivals have renewed their deals.

EMI Music [LNDONE.UL], the smallest of the big four music labels, quietly renewed its deal with YouTube in February after Sony Music Entertainment (6758.T) (SNE.N) and ahead of Vivendi's (VIV.PA) Universal Music Group. Universal Music renewed its deal with YouTube and announced a wider plan to partner with YouTube to create a stand-alone music video website called Vevo. The site is expected to be launched later this year.

Warner Music, which ironically was the first major music company to sign a deal with YouTube, is now the lone hold-out from renewing its partnership with the hugely popular website.

Videos from Warner artists like Madonna and Green Day were yanked off YouTube last December after both sides were unable to agree on financial terms for the licensing rights.

Two people familiar with the talks between Warner Music and YouTube said while talks are still ongoing no imminent announcements are expected.

As chief executive of the only publicly traded major music company, Warner Music's Edgar Bronfman is keen to improve terms of his previous deal with YouTube. He is also faced with a particularly difficult music market which has seen tumbling CD sales and slowing digital music growth.

YouTube has been facing calls from various facets of the music industry in the last year all demanding an increase in licensing fees. This spring it was forced to block all music videos to British users after it was unable to reach a rights deal with the main UK songwriters' collection society.

The video site, which is owned by search giant Google Inc (GOOG.O), has more than 100 million visitors every month in the United States alone and is just as popular in many other countries. Music industry insiders acknowledge that YouTube is now catching up with radio and music television as one of the most important music discovery tools for fans.

YouTube has been under pressure from Google investors who are keen for the website to start making a meaningful contribution to its parent's bottomline.

The company has started to counter analysts' estimates that YouTube is losing millions of dollars a year by streaming tens of millions of videos for free everyday.

On Monday YouTube public relations executives posted a blog claiming to be "myth-busters" about the site, including that only 3-5 percent of the videos on YouTube are monetized through advertising. The post described that statistic as "old and wrong."

"Monetized views have more than tripled in the past year, as we're adding partner content very quickly and doing a better job of promoting their videos across the site," the post said.

Google executives said last week that YouTube is on the path to profitability in the near future.

(Reporting by Yinka Adegoke; Editing by Richard Chang)