Tiscali has been forced to close its Tiscali Juke Box service after just one month of trading - and places the blame squarely with European record labels.
In an open letter explaining its decision, the company accuses Europe's record industry as being: "Virtually impossible to work with in the promotion of legal music online."
Tiscali Juke Box launched on April 26 2006 in Italy and the UK. It aimed to become a licensed peer-to-peer service, which let users legally listen to and search through millions of tracks.
Labels slammed by frustrated client
"The service has now been judged by the major recording labels in Europe to be 'too interactive' only because it allows users of the internet (the most interactive of mediums) to carry out searches by 'artist' in addition to genre," Tiscali said.
Online music rights are subdivided into two main categories: "non-interactive rights", which can be negotiated with the collecting societies, and "interactive rights" which must be negotiated with the individual recording labels.
After signing an experimental one-year webcasting agreement based on the management of non-interactive rights, the labels contacted Tiscali to demand that it eliminate the search by artist feature of the service, or be forced to negotiate interactive rights with the individual recording labels.
"It is surprising that after just one month, despite the joint regular testing and fine-tuning phase carried out prior to the launch of the service, the majors have decided to submit unexpected change requests," Tiscali said.
Short-sighted and lazy
The company slammed the labels as "short-sighted", and also for, "not making any effort to understand either the basic needs or habits of music fans that choose to consume music via the internet, or the acts directly benefiting from this promotion."
Tiscali went even further, accusing European major labels of engaging in a "clear attempt to discriminate between American and European music fans and internet users."
"Faced with this total lack of understanding and despite having put our best efforts into developing and testing the service in full transparency and co-operation with the recording industry, Tiscali today finds itself being forced to turn its new service off," the company said.
Karma Download no more
In related news, independent UK digital music service Karma Download has suspended its service indefinitely. A note on the company's website warns: "It is regretted that trading has been temporarily suspended until Karma Group reviews its financial standing after an aborted capital raising exercise."
The service had become one of the largest independent music services in Europe, but sales volume and an increasingly competitive market caused investors to seek higher returns elsewhere, it appears.