Warner Music Group has pulled its music from Last.fm’s free on-demand music streaming service in an apparent dispute over compensation rates.

The online radio station has started removing Warner artists from its services according to industry website Billboard.biz.

"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", the company told Pocket-lint independently when asked about the report.

Last.fm's on-demand service still carries music from other labels including Universal Music Group, Sony BMG Music Entertainment and EMI Group.

In addition, songs by Warner artists can still be heard through Last.fm's Internet radio service, although playing it "cool", the company told us that:

"While we work things out, be assured that there's more than enough music to fill a lifetime of listening on Last.fm, and we are continually adding to it."

According to Billboard.biz Warner has been frustrated by Last.fm’s failure to proceed with its plans to launch a music subscription service, the source says.

We will keep you posted.