Independent producers supplying content to axed online education service BBC Jam face an uncertain 12 months and some could be forced out of business.

The BBC is meeting with new media producers this week to discuss the future of work commissioned for the now-defunct online education service.

BBC Jam was axed last month by the BBC Trust after complaints to the European commission from commercial rivals.

The trust has asked BBC management to draw up plans for a new online education service, but it could be up to a year before this replacement for BBC Jam launches.

Producers have been told that the BBC will fulfil its financial obligations with existing contracts, although individual companies need to negotiate whether contracts for new projects will be paid in full or in part.

Some smaller firms, which had been relying on BBC Jam commissions for the majority of their income, could be forced out of business, according to sources close to the matter.

Of BBC Jam's £150m budget, £90m was assigned to content - of which 50% had to be spent with external suppliers.

The BBC had commissioned work from a range of new media companies, with BBC Jam commissions understood to account for between 40% and 90% of each company's total workload.

Pact, the independent producers' trade body, will meet the BBC shortly after Easter to discuss the proposal for BBC Jam's replacement.

Producers have been invited to meet the BBC to contribute ideas for the new service, which has been welcomed by Pact.

While there is likely to be some overlap between the new service and BBC Jam, its format will not be known until the BBC drafts the replacement proposition.

Until then, producers will not know if existing projects could be suitable or would be considered.

But between £50m and £60m of content has already been commissioned and the producers are privately concerned that the material will never reach the audience it was designed for.

Anthony Lilley, the chief executive at Magic Lantern, one of BBC Jam's external suppliers, said that neither the production companies nor the BBC want this content to be wasted.

He said: "We must find ways of releasing this content that doesn't damage the market but gets it to the kids that need it. That might be an open source type of sharing model."

That could mean redistributing the existing content through a learning management system, one of the ways content is syndicated to schools.

Adam Salkeld, the head of programmes at Tinopolis, the biggest supplier of content to the BBC online education service, confirmed that the company had received notice to stop work on its BBC Jam-related projects.

"There are potentially two great losers here. The kids of Britain - because they need all the help they can get in our underperforming schools - and the people in our creative media companies," he said.

"The BBC is asking companies to hold off for a year and that may mean some companies go to the wall. Others may never regain that sense of momentum and creativity - the buzz that you get in small, innovative companies.

"We had the potential to lead the world and we have shot ourselves in the foot."

The new proposal will be subject to the BBC's market impact assessment and the public value test, and it is expected to be between nine and 12 months before the new service is live. The BBC has not given a date for submission of the new proposal to the BBC Trust.

"The exact timetable and process for getting proposals to the trust will be kept under review," said a BBC spokesperson.

"It's vital to get a robust proposition and application and that's what we're working towards."

The BBC director general, Mark Thompson, is reported to be bullish about the proposed new service, saying it has to be on the same scale as BBC Jam and won't be a lowering of ambition - but several producers have expressed concern at a year-long gap in the BBC's educational provision.

Writing in MediaGuardian last week, Channel 4's executive chairman Lord Puttnam said the current situation was "unnecessarily cruel" and had left "thousands of children stranded".

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