To stream music videos over the web, YouTube not only needs to pay fees to the relevant record labels regarding the visual and audio aspect of the videos, but it also needs to pay licensing fees to the music publishers for the music and lyrics. The PRS is responsible for collecting those fees for the music publishers.
In a blog, YouTube's Patrick Walker said: "Our previous licence from PRS for Music has expired, and we've been unable so far to come to an agreement to renew it on terms that are economically sustainable for us".
Thousands of legally uploaded music videos were blocked yesterday afternoon. However the move only affects UK users of the Google-owned site and those in other countries will still be able to view the content. Elsewhere users around the world won't be affected.
"PRS is now asking us to pay many, many times more for our licence than before. Under PRS's proposed terms we would lose significant amounts of money with every playback. In addition, PRS is unwilling to tell us what songs are included in the license they can provide so that we can identify those works on YouTube - that's like asking a consumer to buy an unmarked CD without knowing what musicians are on it," he added.
PRS has claimed YouTube has implemented the move in a bid to reduce the royalties it currently pays to artists.
Steve Porter, CEO PRS for Music, said: "We were shocked and disappointed to receive a call late this afternoon informing us of Google's drastic action which we believe only punishes British consumers and the songwriters whose interests we protect and represent".
YouTube revealed it is "still working with PRS for Music in an effort to reach mutually acceptable terms for a new licence" and hopes that "professional music videos will soon be back on YouTube for our users in the UK to enjoy".
"The dispute between YouTube and the PRS over premium music licensing deals could be considered a classic case of an online, commercial deal gone wrong. Originally seen as an encouraging step towards new online licensing, it now provides yet another example of the difficulties in playing catch-up to the new realities," said Duncan Calow from law firrm DLA Piper.
"Greater innovation, in the form of new online business models, must be introduced to exploit Web 2.0's full potential. More importantly, these new business models are urgently needed to create more 'win-win-win' scenarios between producers of content, the access channels and the consumers for whom the content is aimed. Without this, we are forever at an impasse."