Tiscali has shut down its music sharing Juke Box service, claiming that European music fans are being discriminated against and that the music industry is " short-sighted".
The ISP also declared that the European recording industry is almost " impossible to work with".
The peer-to-peer Juke Box service, launched in April, was suspended by Tiscali when it was told to remove its 'search by artist' option. Tiscali argued that US services were able to offer such a function.
But the International Federation of the Phonographic Industry (IFPI) said that Juke Box had offered a level of interactivity that breached its licence.
Juke Box was a legal service where songs could be listened to but not opened or downloaded. Royalties were paid for "non interactive rights" to songs.
But the IFPI said that Tiscali was "paying to offer one type of service, but was actually offering another very different one".
Richard Ayers, editor of Tiscali.co.uk, said that he was very disappointed by the decision, and pointed out that Mercora, which was a partner in the Juke Box service, had been running the same service in the US for over a year.
"I don't quite understand why the European record labels appear to have a problem, whereas the ones in the US don't," he said.
Tiscali has the option to operate under the terms of its agreement or to remain suspended, according to the IFPI.
Click the link to see Tiscali's open letter to the European recoding industry.
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