Billy Bragg is among musicians to have attacked Google's tactics
Musicians have asked the EU to intervene in a row over the rates YouTube is offering small music labels to include them in a new service.
Singer Billy Bragg and Radiohead guitarist Ed O'Brien are among those accusing Google-owned business of trying to "strong-arm" independent labels into accepting low fees.
YouTube has long been rumoured to be developing an advertisement-free music-subscription service.
But it has yet to confirm details.
"YouTube provides a global platform for artists to connect with fans and generate revenue for their music, paying out hundreds of millions of dollars to the music industry each year," said a spokesman for the company.
"We have successful deals in place with hundreds of independent and major labels around the world - however, we don't comment on ongoing negotiations."
Bands backlash
Impala - a body representing Europe's indies - is spearheading the complaint.
It says it plans to request "prompt intervention" from the European Commission into negotiations over a new YouTube "music streaming service".
Labels can currently make money by allowing adverts to be placed on their music videos
The organisation complains that indies are being presented with non-negotiable contracts accompanied by the threat that music videos they have posted to their YouTube channels will be blocked from site altogether if they do not agree to the terms.
The labels can currently make money by placing adverts at the start of the clips or via pop-up boxes that appear while they are playing.
"YouTube are shooting themselves in the foot with their attempt to strong-arm independent labels into signing up to such low rates," said Billy Bragg.
"They're in danger of launching a streaming service that lacks the innovative and cutting-edge sounds that independent artists bring."
Ed O'Brien - who co-chairs the Featured Artists Coalition, a musicians' rights campaign group - added: "To restrict [indie artists and labels] in this way is to risk creating an internet just for the superstars and big businesses."
Independent labels being represented in the battle include XL Recordings, 4AD. Cooking Vinyl and Domino.
That means failure to reach an agreement could potentially see music from Adele, Jack White, The xx, Royksopp, M.I.A., Hot Chip, The National and Arctic Monkeys excluded from the service.
'Lowest rates'
Android Police, a news site, first reported in November that code included in the YouTube app referred to a new service called Music Pass.
It said the facility appeared to offer users access to offline playback of "uninterrupted music" with "no ads on millions of songs".
Google already operates a separate audio-only music-subscription service - Google Play Music All Access - and there are several competitors on the market including Spotify, Deezer, Xbox Music and Apple's Beats Music.
The indies have struck deals to include their tracks on all these services.
YouTube has the potential to disrupt other music services that are said to pay higher rates
But Complete Music Update - an industry news site that covers the sector - said the labels felt they had been backed into a corner by Google's latest demands.
"YouTube already pays what are probably the lowest rates in the business for music labels' videos," said Chris Cooke, the site's business editor.
"The majors and independents agreed to that because YouTube isn't just a revenue stream, it's one of the most important promotional platforms in music today.
"But what the indies are getting really angry about is that YouTube seems to be threatening to withdraw this powerful promotional platform if they don't sign up to the new audio service - a service that will be going head-to-head with Spotify, Deezer et cetera while, as we understand it, paying considerably lower royalties."
Google already operates a Play-branded music subscription service
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