Record labels representing 95% of the music industry have signed up to the new terms, he was quoted as saying, although that doesn't include independent labels like XL Recordings and Domino.
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The move comes after a breakdown of talks between YouTube and the independent music trade organisation about the new music streaming service late last month.
The Worldwide Independent Network said the contracts that YouTube was offering to independent labels are on "highly unfavourable and non-negotiable" terms.
The decision, however, has attracted strong criticism from artistes and labels alike.
Alison Wenham, who runs the Worldwide Independent Network, told the BBC that independent labels around the world are "disappointed" at the lack of respect and understanding shown by YouTube. Moreover, the report mentioned that Radiohead guitarist Ed O'Brien had "accused Google of trying to 'strong-arm'labels into accepting low fees".
BBC observed that "even if blocks do go ahead, content from artists signed to independent labels will remain available on YouTube via channels such as Vevo".
YouTube is already the biggest online source of free streaming music, but it is planning a paid service to compete directly with other subscription services like Spotify.With additional inputs from BBC