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YouTube to block indie labels that refuse to sign new terms

Users may see fewer indie artists on YouTube, as the record industry and Google spar over licensing agreements for a new paid service.

Seth Rosenblatt/CNET

Artists like Adele or the Arctic Monkeys may soon disappear from YouTube as Google plays hardball with independent record labels, according to a report published Tuesday by the Financial Times.

The search giant has presented labels with new licensing terms for its new ad-free, paid-for service, but some have refused to sign in hopes of getting a better deal. YouTube will start scraping the video platform of content that does not adhere to the new terms "in a matter of days," Robert Kyncl, YouTube's head of content and business operations, told the FT.

The new service will allow users to watch videos without advertisements, even while offline, and will be tested internally in the coming days. The service has no set launch date but is being prepped for a wider release later this summer, a person familiar with the streaming service's development told CNET.

"Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We're adding subscription-based features for music on YouTube with this in mind," a YouTube spokesperson told CNET. "We are excited that hundreds of major and independent labels are already partnering with us."

A YouTube spokesperson said that the videos would be blocked only in countries where deals are not signed, not universally across YouTube.

YouTube said that the scrubbing will affect 5 percent of musicians represented by labels on YouTube, not the 10 percent originally reported by the Financial Times, and not 5 percent of all musicians on YouTube. The situation is made even more complex because artists who have a label in one country or region that disputes YouTube's streaming service terms, but are represented by a different label in another country that agrees to the terms, could find their music available to fans in the latter country but not the former.

The person familiar with the service's development said that some members of WIN -- an umbrella group representing independent music label organizations from around the world that is disputing the contracts' terms and has filed an official complaint with the European Commission -- "have signed deals" with YouTube.

A request for comment by WIN was not immediately returned.

While Nielsen Billboard reports that independent labels make up 15.15 percent of the market, a Billboard chart showing music ownership promoted by the licensing agency Merlin says that indie labels are more than double that at 32.6 percent, because Nielsen doesn't count digital streaming services.

YouTube declined to comment on how the service will affect musicians unaffiliated with labels.

The music business has long had a contentious relationship with the tech industry, and the two sectors have often jostled over rights agreements that satisfied both sides as they try to lure users away from their competitors. Apple last month acquired Beats Electronics, and with it got a streaming music service and two co-founders -- Jimmy Iovine and Dr. Dre -- who have deep ties to the music industry. Amazon last week launched a streaming music outfit of its own to bolster its Prime subscription service.

YouTube itself is also seeing new competition. Yahoo is said to be working on its own video service to be launched this summer. It's main selling point is more lucrative terms for content creators.

Update, 5:08 p.m. PT: Adds comments from person familiar with YouTube's plans for the service.

Update, 12:33 p.m. PT: Adds comment from YouTube.

CNET's Seth Rosenblatt contributed to this report.