The desperate plea for intervention – supported by the likes of Billy Bragg and Radiohead's guitarist Ed O'Brien – comes amid an escalating row about the fees that YouTube is prepared to pay artists signed to independents.
Bragg accused the Google-owned site of "shooting itself in the foot" by trying to strong-arm indies into deals on low rates, in a dispute that has taken on an extra edge because YouTube wants to launch an online service to compete with Spotify.
"They are in danger of launching a streaming service that lacks the innovative and cutting edge sounds that independent artists bring. Would music fans be willing to pay for such an inferior product? I don't think so," Bragg said.
O'Brien, whose band Radiohead once sold its In Rainbows album by asking people to pay whatever they thought it was worth, said marginalising indies meant a digital music world catering only to big names and corporations.
"Indie artists and labels are at the cutting edge of the future of music," O'Brien added. "To restrict them in this way is to risk creating an internet just for the superstars and big businesses."
Faced with such high profile lobbying YouTube argues its online platform has become hugely important to help musicians build their fanbases. The company said that it has hundreds of successful commercial arrangements in place with record labels around the world.
But the Worldwide Independent Network (WIN), a trade body representing independent labels worldwide, is so frustrated with YouTube's negotiating stance that it will lodge a formal complaint on Wednesday with the European Commission over the site's tactics.
WIN represents 850 labels in the UK including Beggars Group – owner of labels including XL Recordings, which is home to Adele and The White Stripes – and Domino, which has signed Franz Ferdinand as well as Arctic Monkeys.
Other acts threatened by the YouTube ban include Radiohead, Queens of the Stone Age, Vampire Weekend, Goldfrapp, The Prodigy, Nitin Sawhney, The xx, M.I.A. and Grimes.
Three large music companies dominate the industry – Universal, Warner Music and Sony Music, known as the majors. In an attempt the match their clout in negotiations with digital media giants such as YouTube, the remaining independent labels negotiate collectively, but often complain that they struggle for the best commercial terms.
They say YouTube is trying to cut out Merlin, the body that represents them in rights deals, and is instead making direct approaches to individual independent labels with a "non-negotiable" contract for its proposed streaming service.
The labels say they have allegedly been threatened that if they don't sign on YouTube's terms they could find their music videos blocked. Alison Wenham, chief executive of WIN, said: "We have been hearing from many companies across the world who are expressing fear, displeasure, outrage and confusion at the phone calls, letters and bullying they seem to be receiving from YouTube employees."
A YouTube spokesman said the site "provides a global platform for artists to connect with fans and generate revenue for their music", adding: "We have successful deals in place with hundreds of independent and major labels around the world, however we don't comment on ongoing negotiations."
Google and YouTube's sheer size mean that the group is frequently the target of regulatory and legal actions. A ruling by a European court ruling forced Google to allow users to demand inadequate or irrelevant personal information be removed from search results, known as the "right to be forgotten".
Wenham, who is also chairman of UK indie music sector trade body AIM, said the European complaint marks a "first step" in a global campaign in which small labels would use their artists to campaign against the digital giant.
"Our fellow trade associations around the world, representing tens of thousands of independent companies, also take issue with the actions of YouTube," she said.
John Enser, partner at law firm Olswang, said: "Music services offered by big tech companies, not just in terms of YouTube but also iTunes, have often offered 'take it or leave it' terms to indie labels.
"While it is understandable that YouTube cannot devote resources to thousands of negotiations of small contracts, the indies do have a body, in the form of Merlin, that negotiates deals for them.
"For YouTube not to offer terms to Merlin on a similar basis to those it offers to the three remaining traditional majors does appear to give them a case to answer to the competition authorities."
YouTube's plans to go head to head with Spotify, Deezer and other subscription music services have been rumoured for some time.
In March the New York Post reported that the new service would be called Music Pass, and would be likely to cost $5 a month in the US with ads or $10 a month for an ad-free version.
guardian.co.uk © Guardian News and Media Limited 2010
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