When you see the message "this video contains content from umg, who has blocked it on copyright grounds," it means that YouTube or the video's creator has restricted access to the video in your country. This could be because of a copyright issue or due to other reasons, like restrictions on certain types of devices or applications. This is something that the video creator cannot control or fix.
The gist of the story is that Universal Music Group took exception to a song on the Megaupload site, which contained clips of artists who signed with them, and got YouTube to take down the video. But Megaupload re-uploaded the video, and now UMG has filed suit for a restraining order against the site.
This story illustrates that when it comes to video, copyright laws can be very murky. The lesson is that if you are planning to use video in any way, it's important to understand how copyright laws work so that you can avoid problems like this one.
If you want to use other people's videos in your own videos, consider using royalty-free or public domain content. Also, if you ever find yourself in the position of having a video pulled from your account, don't be afraid to file a dispute with YouTube. They have a very easy to use system for doing so, which will allow you to prove that your video is in fact legal and not subject to copyright infringement.
