The major labels, on the other hand, would benefit from that growth, as well as ad revenue, he said.

"Whilst Merlin continues our negotiations, we remain extremely concerned that with MySpace Music the major record labels are acting not only as competitors, but through their equity stakes in the venture, as the clients/end user as well," Caldas said in a statement.

A Merlin spokesman later said the indie labels had been treated like "second class citizens".

In a statement MySpace said a deal is on the table for Merlin: "We have offered a relationship with Merlin that provides equal opportunities to Merlin's Labels and Merlin's artists that we have provided to all labels and artists.

MySpace Music did reach a licensing agreement with independent digital music distributor The Orchard, which carries 1.3 million tracks. But The Orchard did not get a stake in the business.

The Orchard Chief Executive Greg Scholl said the fact his company had not taken a stake in MySpace had allowed him to negotiate for "more aggressive" advertising share rates than the major labels. He also said taking an equity stake in MySpace Music was not a priority for his business.

"If any independents get equity I'm confident my clients will get a stake. The real issue should be profit sharing," said Scholl, whose company's clients include small labels like Shanachie, Gut Recordings and Greensleeves.