Universal Music Group has said that social networking sites MySpace and YouTube are violating copyright laws by allowing users to post music videos and other content involving Universal artists without permission.

“We believe these new businesses are copyright infringers and owe us tens of millions of dollars”, Universal Music CEO Doug Morris told investors at a conference in Pasadena. “How we deal with these companies will be revealed shortly.”

According to Associated Press, Universal's talks with YouTube Inc. have deteriorated and the recording giant is set to file a copyright infringement lawsuit against the video-sharing company if no agreement is reached by the end of the month.

Universal's talks with News Corp's MySpace have been progressing but aren't finalised, an anonymous source told the news agency.

Last month YouTube, who boasts users download over 100 million videos every day started accepting payment for highlighting video in prime spots on its home page.

The first such ads has been paid for by Warner Music Group to promote IT Girl Paris Hilton's new album Paris.

MySpace has also started offering a similar service with parent company News Corporation using the social networking site to promote Fox TV shows such as My Name is Earl and 24 staring Keifer Sutherland.