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The official reason is that because YouTube is going to have a pay service that is ad free, and that if the indie labels don’t agree to be part of the paid service, it will put YouTube in a situation where a significant amount of music is available for free users, but paradoxically not for paying customers. Obviously Google/YouTube doesn’t want that, but it seems that they are willing to pull all of the free content if they don’t get their way. The indie labels and artists claim that YouTube is offering them significantly worse terms than the rest of the industry, but I’m not privy to the details. YouTube has a lot of leverage here, and if they prevent upcoming artists who haven’t signed with a major label from being on YouTube, it could seriously harm many careers, and perhaps prevent many bands from even becoming known to a wider audience.