Video-sharing site YouTube has signed a deal with media giant Warner Music to allow its material to be used legally.

It means interviews and videos by Warner's artists can be used in return for a slice of advertising revenue.

The agreement also covers the use of material in homemade videos, which form a large part of YouTube's content.

Both companies hailed it as a landmark agreement, coming days after Universal Music said it was considering legal action over sites such as YouTube.

A royalty-tracking system has been developed by YouTube to detect when videos on the site are using copyrighted material and work out how much Warner is owed in advertising revenue.

Media 'transformed'

The technology would also enable Warner to review homemade videos and decide whether to approve or reject them.

Chad Hurley, who helped set up YouTube in a Californian garage just 19 months ago, said: "We are very excited. This is a real landmark for our company."

Warner Music Group, the world's fourth largest record company, includes artists such as Madonna, the Red Hot Chili Peppers and Green Day, as well as vintage names like Led Zeppelin, The Doors and Ray Charles.

Warner Music chairman Edgar Bronfman said: "Consumer-empowering destinations like YouTube have created a two-way dialogue that will transform entertainment and media forever."