Music videos by artists such as Adele and Arctic Monkeys could be blocked by YouTube in the next few days after a number of independent record labels refused to sign up for its new subscription service.
Earlier this month, trade groups representing thousands of labels and musicians appealed to the European Commission to intervene on their behalf.
They have accused the Google-owned company of offering unfair contractual terms to the independents in comparison to those offered to larger firms like Universal or Sony.
'XL Recordings', which represents Adele and The XX, and 'Domino', the label behind the Arctic Monkeys, are understood to be among the indies holding out for a better deal.
YouTube has been planning a paid streaming service to compete with companies like Spotify, Pandora and Rhapsody for over a year.
The new paid-for service will enable users to watch videos or listen to music without any adverts, on any device, even if it is not connected to the internet.
Robert Kyncl, YouTube's head of content and business operations, told the Financial Times record labels representing 90% of the music industry have signed up to their terms.
"While we wish that we had 100% success rate, we understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience" Mr. Kyncl said.
A source has said that 95% of labels have now signed up, which he believes suggests some may have given in.
Mr. Kyncl said internal testing will begin in the "coming days".
A YouTube spokesperson said "Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry".
"We're adding subscription-based features for music on YouTube with this in mind - to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year".
"We are excited that hundreds of major and independent labels are already partnering with us" they added.
In the US, the American Association of Independent Music asked the Federal Trade Commission to prevent YouTube from blocking its member labels' content, saying that this "constitutes abuse of a dominant position with regard to the digital music and video streaming market" according a letter signed by the group's president, Richard Bengloff.
Last week Amazon launched its own music streaming service as part of its 'Prime' subscription package.
In May Apple acquired Beats Music as part of its US$3 billion purchase of Dr. Dre's headphone-maker Beats Electronics.
