Indie labels criticise YouTube
The company has indicated it would block videos from its site from any label which failed to sign up to a new streaming service.
But the labels have criticised YouTube over the move, saying they have been offered unfavourable and non-negotiable terms for the soon-to-be launched subscription service.
They are urging the video-sharing site to negotiate with them to come to a deal.
Major names such as Adele and Arctic Monkeys continue to have deals with independent firms.
YouTube's global head of business Robert Kyncl said in an interview that the company would block promos from labels which do not sign up and accept the deal for the ad-free service.
The Worldwide Independent Music Industry Network (WIN), which represents indie firms globally, said the terms undervalue existing rates for deals with competitors such as Spotify and Deezer. YouTube's service is said to have come to an agreement with music giants Sony, Warner and Universal.
Alison Wenham, the CEO of WIN said, "Put simply, by refusing to engage with and listen to the concerns of the independent music sector YouTube is making a grave error of commercial judgment in misreading the market.
"We have tried and will continue to try to help YouTube understand just how important independent music is to any streaming service and why it should be valued accordingly.
"Music fans want a service that offers the complete range of music available. This is something that companies such as Spotify and Deezer do, both of whom have excellent relationships with the independent music sector."
She added: "By not giving their subscribers access to independent music YouTube is setting itself up for failure. We appreciate that a small number of independent labels may have their own reasons for agreeing to YouTube's terms, that is their prerogative, but they are very much in the minority.
"The vast majority of independent labels around the world are disappointed at the lack of respect and understanding shown by YouTube. We once again urge YouTube to come and talk to us."
Kyncl told the Financial Times that they intended to press ahead with the service despite not getting the indies on board.
He said: "While we wish that we had 100 per cent success rate, we understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience."