Universal Music, the world’s largest music company, is suing Rupert Murdoch’s social networking site MySpace, alleging its users are infringing copyright by posting pop songs and music videos on their web pages.

The suit, filed last night in a California court, demands that MySpace pay Universal up to $150,000 for every one of its copyrighted works used by the website’s army of 125 million users. The compensation demand runs into tens of millions of dollars.

MySpace, owned by Mr Murdoch’s News Corporation, dismissed the lawsuit as “meritless”.

Universal, which is owned by the French media giant Vivendi and counts Elton John, 50 Cent and Gwen Stefani among its biggest acts, is emerging as one of the most aggressive defenders of the music industry’s intellectual property in the digital age. Rivals have preferred to cut revenue sharing deals with websites such as MySpace and YouTube, where copyrighted material is uploaded or modified by users, but Universal has held out for more lucrative arrangements.