The might of iTunes has been challenged after an independent download site run from Kentish Town was voted the UK's best online music store.

Bleep.com, set up two years ago by British record label Warp Records, beat Apple's iTunes and Napster to win the award at the annual BT Digital Music Awards.

Like iTunes, Bleep.com offers single track and album MP3 downloads, but it focuses on indie-rock and electronic music found on independent labels - including Franz Ferdinand's Domino and Bjork's One Little Indian.

Record industry insiders said Bleep's success represented a growing trend away from the global download firms.

One source said iTunes was "the Tesco of the music marketplace, with all the hits, but people would rather go for something a bit more alternative, with a bit more heart and soul".

Warp Records was founded in Sheffield in 1989 by former record store employees Steve Beckett and Rob Mitchell, whose breakthrough artists included Aphex Twin. In the late Nineties the label moved to Kentish Town and in 2004 established Bleep.com.

Other winners at last night's ceremony, held at the Roundhouse in Camden and hosted by Edith Bowman, included Peter Gabriel - handed the inaugural Pioneer Award for his innovation throughout a 40-year music career.

The former Genesis vocalist was the first musician to record an album entirely on digital tape - in 1982 - and set up the first online digital music distribution service in 2000.

Gabriel, 56, warned new artists to keep control over their names - and stop the record labels from muscling in. "I would say to artists at the beginning of your careers in this business, own your name, own your website, own your rights," he said.

"There's a future when the record business becomes a service industry but not owners of talent. It's only if we're smart, something we have never been, that there's a future," added Gabriel.

The BT Digital Music Awards, now in its fifth year, has rapidly grown in stature as the download revolution gains pace, and the record industry has seen the importance of the internet in breaking new bands such as Arctic Monkeys or Lily Allen.

In the year to date there have been 35 million singles downloads - half of all singles sales in Britain. At the ceremony - which featured performances by Plan B, Nate James and Lil' Chris - Lily Allen was named best pop artist, while Muse took the best rock artist gong and Lemar was named best urban act.