Major artists like Adele, Arctic Monkeys and Jack White could disappear from YouTube "in a matter of days" after the Google video service confirmed that it was dropping content from independent labels that have not signed up for its upcoming subscription music service.
YouTube is about to begin testing the new service - which will charge people to watch and listen to music without adverts, and download songs to their mobile devices - in the next few days.
The company's head of content and business operations, Robert Kyncl, told the Financial Times that the service - previously rumoured to be called YouTube Music Pass - will launch more widely later in the year.
His confirmation that YouTube will block videos from labels that do not sign licensing deals for the new premium tier will be hugely controversial among indie labels. Trade body Worldwide Independent Network (Win) has filed a complaint to the European Commission about its negotiating strategy.
Kyncl said YouTube had signed up labels representing 90 per cent of the music industry.
The licensing agency for independent labels, Merlin, estimates that indies collectively account for a 32.6 per cent market share of the recorded music industry's sales and streams.
Win's chief executive, Alison Wenham, was blunt, saying: "They have suffered a simple but catastrophic error of judgment in misreading the market."
Win said the company had signed lucrative licensing deals with major labels like Sony, while demanding independent labels sign up to inferior terms or face having their videos blocked from YouTube's free service.