YouTube will remove music videos by artists such as Adele, Arctic Monkeys and Radiohead, because the independent labels to which they belong have refused to agree terms with the site.
Google, which owns YouTube, has been renegotiating contracts as it prepares to launch a music subscription service.
A spokesperson for the indie labels said YouTube was making a "grave error of commercial judgment".
YouTube said it was bringing "new revenue streams" to the music industry.
Speaking to the Financial Times, Robert Kyncl, YouTube's head of content and business operations, said videos from independents could be blocked "in a matter of days," if new licenses are not negotiated.
The three major record labels - Universal, Sony and Warner - have all agreed terms with the site, but smaller independents are holding out.
'Lack of respect'
Some independents say they are being offered "highly unfavourable terms". Radiohead guitarist Ed O'Brien accused Google of trying to "strong-arm" labels into accepting low fees.
Alison Wenham, who runs the Worldwide Independent Network , which represents the independent music community said YouTube is "making a grave error of commercial judgment in misreading the market".
"We have tried and will continue to try to help YouTube understand just how important independent music is to any streaming service and why it should be valued accordingly," she added.
"By not giving their subscribers access to independent music YouTube is setting itself up for failure... The vast majority of independent labels around the world are disappointed at the lack of respect and understanding shown by YouTube."
BPI, the organisation which represents British record companies - including the three major labels - said it was wrong for YouTube, which is the dominant online video platform, to "threaten to ostracise certain independents".
Chief executive Geoff Taylor said the move would end up "denying fans the opportunity to hear their music, and labels and artists the chance to earn a living from it - because they are unwilling to surrender to a take it or leave it ultimatum."
Impala, a body which represents the labels - including XL Recordings, 4AD, Cooking Vinyl and Domino - has appealed to the European Commission for help with its battle against YouTube.
The BBC understands that even if blocks do go ahead, content from artists signed to independent labels will remain available on YouTube via channels such as Vevo.
Videos which are exclusively licensed by independent record labels, such as acoustic sets or live performances, may be taken down.
A YouTube spokesman told the BBC: "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."
YouTube's entry into the music subscription market comes after Amazon launched a similar service for its Prime members, and Apple bought online music service Beats Music.