Apple and the independent labels are reportedly closing in on a deal which will enable iTunes Music Store to offer songs from Europe's thriving indie-music sector.

While music industry sources refused to be drawn, The Times today – citing "sources" – reports that "a pact could be announced as early as today".

It is thought that Apple is speaking with key indies in Europe, and that all parties hope the deal, if agreed, may emerge as a template for Apple's future deals with European independents.

Agreeing such a deal would enable Apple to offer key artists such as The White Stripes, Dizzee Rascal, Franz Ferdinand and many more through its iTunes Music Store, ending an impasse that has existed since June 8 – before the service launched in Europe.

The Times says the deal should "ease the concerns of independent record labels", and that they would be "locked into long-term contracts at fixed prices".

Bad terms
The labels had been concerned that Apple's original deal required that they sign-up for a three-year period at a fixed royalty rate, and that this gave complete control of retail pricing through iTunes to Apple.

The labels were also annoyed at the royalties on offer from the company, claiming these were lower than those offered in the US, and well those on offer to the majors.

The Times report says: "The percentage cut that they receive from songs sold over iTunes is also expected to be closer to the rates received by multinational record companies such as EMI and Sony Music."

The dispute between Apple and the indies has been fraught, with talks collapsing several times. However, AIM – a music association that represents the indies in Europe – has agreed terms with Apple's competing music services, OD2, Napster, Sony Connevct and Wippit.

Apple's failure to license independent-label content has severely compromised its UK Music Store offering. While the US market is heavily biased toward major label content Europe's story is very different.

Apple needs indies, and indies need Apple
Independent labels account for 25 per cent of UK music sales and 22 per cent of European sales. More independent label artists were nominated for Brit Awards last year than artists from EMI, Warners and Sony. Independent band Franz Ferdinand has sold over one million albums in the US.

Speaking about the debacle last month AIM chairman and CEO Alison Wenham said: "We welcome the arrival of iTunes in the UK but are disappointed that our members have been unable to agree terms for licensing their repertoire to the service."

Anthony Thornton, album reviews editor for UK music magazine NME said: "Some music that's missing from Apple's service are tracks you'd expect to find there."

A Forrester Research report released last month stressed the importance of carrying locally generated music: "In Europe more than half of music sold is of European origin, and offerings must reflect this. Services will need to employ local languages, emphasize support for local artists and support multiple payment systems," the analyst said.

However, iTunes remains the leading online music sales service. It sold its 100 millionth song late on Sunday night, and sold 1.5 million songs in Europe in its first two weeks of operation.