By Julia Fioretti

BRUSSELS (Reuters) - Websites such as Google's YouTube, DailyMotion and Pinterest could be required by the European Union to seek licenses or revenue-sharing deals with artists for content that is uploaded by their users.

The music industry has long complained that services such as YouTube do not pay artists enough for their music and has urged regulators to close what it calls the "value gap".

They say that Alphabet Inc's Google makes vast sums from ad-supported services such as YouTube, but only a small share of the money goes to the music industry.

The European Commission, the EU executive, is looking at imposing an obligation on platforms hosting user-uploaded content -- such as YouTube, Vimeo and DailyMotion -- to seek agreements with rights holders "reflecting the economic value of the use made of the protected content", according to a draft paper, seen by Reuters, listing the preferred options for the EU's copyright reform.

The agreement could take the form of a copyright license or a monetization agreement such as sharing of revenue, an option that is already widely used.

The Commission also wants online sharing platforms to put in place "appropriate and proportionate measures, such as content identification technologies, to ensure the functioning" of the agreements with rights holders.

The proposal is still being discussed and the final version is expected in late September.

Google says that YouTube alone has generated more than $2 billion for rights holders by striking licensing agreements with music labels and publishing societies around the world.

YouTube uses Content ID, which automatically identifies an artist's content, to give rights holders the choice of whether to leave it up, block it or monetize it through a revenue-sharing deal.

Google says that more than 98 percent of all YouTube copyright removal claims use Content ID and the music industry chooses to monetize 95 percent of its Content ID claims.

But rights holders say they do not have enough bargaining power and are presented with a "take it or leave it" deal since the online platforms have no obligation to negotiate with them.

The draft paper said its proposals are likely to increase revenues for rights holders but did not estimate by how much.

Google declined to comment.

The music industry says that Content ID does not work well enough and subscription-based services such as Spotify generate more revenue for the industry despite a smaller user base.

NEWS PUBLISHERS STRENGTHENED

The Commission also wants to give news publishers a new exclusive right covering the online use of their content to give them more bargaining power vis-à-vis search engines such as Google when demanding payment for showing snippets of their articles.

The media industry has often accused Google of making money at its expense by making its content freely available via Google News.

The Commission expects the new right to increase publishers' revenues, though they can still decide to make their content freely available.

"The market power of Google/YouTube is such that many content owners will choose not to charge the fees; the quid pro quo being that in return for allowing free access to their content they will obtain exposure to users via Google/YouTube’s huge platforms," said Matthew Jones, a partner at EIP, a law firm specializing in intellectual property.

A Commission spokesman said that the granting of a new right to publishers would not affect the way users share hyperlinks on the Internet.

(Reporting by Julia Fioretti; Editing by Mark Potter and David Goodman)