UPDATED STORY & COMMENTARY: YouTube Indie Label Talks Falter. Cease & Desist Orders Fly.

EXCLUSIVE: Informed sources tell Hypebot that talks between new trade organization Merlin and YouTube over payments to independent labels for music used on the site have broken down and legal action by some labels is imminent. Cease and desist orders and lists of videos and songs are being prepared for filing with the courts.

UPDATE: Some indie labels delivered cease and desist orders to YouTube on Friday and others will hit early this week.  No reaction yet from YouTube.

It was only a week ago that a group of larger indies including Rough Trade, Beggars Group, Tommy Boy, Ministry Of Sound, Epitaph,
and Cooking Vinyl joined forces to form Merlin, a trade group designed to enhance indie negotiating power with new media and technology companies.  Too often the major label groups had been able to get better deals with the likes of YouTube and Zune and sometimes indies have been left out of the equation all together.

So Merlin’s mission is to end this "copyright apartheid" and a deal with SnoCap was quickly announced.  But negotiations with the mighty YouTube did not go as well and some Merlin member labels are fighting back.

COMMENTARY: Finding balance between valuable free for promotion and monetizing artistic output has not gotten any easier in 2007.

YouTube has become a primary source of viral music promotion in recent months. So it’s not easy to see why indie labels – who often struggle for attention alongside the majors – would shut off this hugely effective promo fountain. 

But songwriters, artists and others demand to be paid, and it is difficult to sit on the sidelines as Google declares YouTube worth billions and the major labels begin to cut deals. Only by acting together as they appear to be via new trade group Merlin will indie labels get their due.