British bands Arctic Monkeys, Editors and Basement Jaxx are locked in a bitter legal row with a pioneering internet company over unpaid royalties.
Talks between the band's record labels and music radio website Last.fm have broken down without agreement.
Merlin, which represents labels including Beggars Group and Koch, has written to its members claiming Last.fm has been unwilling to "properly address its illegal infringing activity".
Merlin's chief executive, Charles Caldas, confirmed legal action, but hopes a deal could be made.
He says, "We'd do whatever we feel is necessary to ensure that our members' rights are properly protected.
"We're considering what evidence we can put in front of Last.fm to show that there is a vast amount of our members' repertoire being used on their services without licences."
Last.fm boasts 21 million users worldwide and offers 3.5 million audio tracks.