Indies in row with MTV over plan to slash payments

A row is raging between MTV and European independent record labels that threatens to prevent artists such as The Prodigy and the White Stripes being played on its music channels.

MTV Networks Europe has warned independent labels, which produce 22% of the European music market, that their stars' videos might not be shown unless they sign a deal that halves their payments for the music. MTV owns VH1 and its own branded channels and has been accused of "bully boy tactics" over the dispute.

But record labels are arguing that MTV is asking for more content for less money, and that appearing on TV channels is no longer aiding promotion of artists but instead is contributing to a slump in sales.

MTV, owned by American firm Viacom, has been accused of trying to force independent labels to sign a deal directly with MTV rather than via the bargaining group Video Performance Limited, which has rejected the lower deal.

VPL and MTV Europe had been negotiating since the old agreement expired at the end of 2002. VPL, however, rejected a five-year deal that would be worth £840,000 a year spread between thousands of European record labels. The previous deal was worth £1.9m. Groups representing the labels argue that the new deal asks for more rights and increased usage of videos. "The new deal calls for more rights and more TV channels for 55% less than we are currently getting, and usage has increased over the past five years anyway," said Alison Wenham, the chairman of the Association of Independent Music in the UK.

Sean O'Brien, the chairman of Telstar, to which Craig David (right) is signed, said that MTV was guilty of "big corporate bully boy tactics". He said the previous deal only left his company with about £1,000 a year for a few million pounds worth of programming. He thinks that the rise of video channels is also hitting sales of singles, which have plummeted over the past few years.

"[MTV] was not paying anything like a market rate, even if you look at what they used to [pay]," he said. "There is no doubt that increasing access to music TV is diminishing the appetite to buy singles."

MTV said that European labels had been paid more than its average global record label. "We found that we were paying double the rate that we were paying other rate holders," said an MTV spokesman.

He added: "If we have made anyone feel threatened, it was hugely unintentional. We wouldn't have spent an extra year trying to come to an agreement with VPL if we didn't care. We don't want to knock anyone off the network."