The European Commission is currently not drawing any binding rules to regulate the online music market, despite repeated calls by the European Parliament.
At a meeting with MEPs in the legal affairs committee last month (14 November), the commission said: "The submissions analysed so far show that most stakeholders do not see the need for a framework directive, and prefer market-based solutions to regulatory intervention."
"Our recommendation is not detrimental to cultural diversity," said the Maltese commissioner Joe Borg, standing in for his internal market colleague Charlie McCreevy.
The commissioner was referring to Brussels' suggestion that the copyright market be left to market forces.
Defending the commission's stance, Mr Borg noted that most new cross-border initiatives include the music repertoires of several countries, instead of just the one of the culturally more dominant country - as feared by market sceptics.
He also argued that these initiatives enhance cultural diversity, because artists can reach a wider audience and receive more money for their works than would have otherwise been the case.
The response is direct a rebuff of recent calls by euro deputies to regulate cross-border music licensing.
MEPs are in favour of an EU law aimed at protecting local and niche repertoires by demanding that Collective Rights Management societies (CRMs) provide consumers with a diversified range of music products.
Song-writers' and composers' rights are currently controlled by CRMs which grant national distribution licences for record labels and online shops and collect royalties of a few cents per download.
According to MEPs, if unrestricted, CRMs would mostly focus on making money instead of conserving diversity, hampering the developments of national and local music markets.
They also fear that the music industry from smaller member states could be outdone by the bigger more dominant music industries from larger member states, endangering the cultural diversity in the union.
MEPs say some regulation would not weaken the European music sector.
"The proposal for a directive would in no way undermine the competitiveness of creative companies, the effectiveness of the services provided by the collective rights managers or the competitiveness of the companies using [these rights]," Romanian socialist MEP Cristian Dumitrescu said in the committee.
Instead he argued that a directive would "promote creativity and the cultural diversity" in the EU and "take into account the interests of the market" at the same time.
"It's urgent that the commission stops taking dispersed measures, without serious impact studies, examines the situation in all sectors related to art and culture with all involved parties, and adopts an overall policy in conformity with the requirements of cultural diversity (...)," Jacques Toubon, French centre-right MEP said.
But the commission is the only EU institution that has the right to make legislative proposals. In 2005, it only drew up a recommendation, a non-binding proposal indictating how it would like companies or governments to behave or how it may legislate in future.
As a result, the online music market is currently determined by market forces, effectively increasing competition between music of different member states.