Music minister James Purnell (pictured) said that small labels are vital to the British economy, and that they are responsible for nurturing new bands.
Mr Purnell went on to say that a study has been launched into the best ways of supporting small-scale labels, and that said study will help the government to break down the financial barriers that impede company growth.
Some 130,000 people are employed by the music industry, which in turn generates some five billion pounds for the economy, but many small labels find getting off the ground tough. Purnell continued:
"We know the symptoms, now we must find the cause. This study will, for the first time, give us real, robust data which will help inform our future policies.
"It goes without saying - the small music businesses are vital, not only to the industry itself, but also to our culture and economy.
"Without the independent record labels and publishers - who discover much of our new and successful talent - we would be starved of great British acts such as Franz Ferdinand or Bloc Party."