Musicians, publishers, and record labels make money from the music they produce through royalties. This means that whenever a song or a snippet of a song is used in a video like a movie, an advertisement, or played on radio, in the background of a store, or streamed online, an amount is paid for the usage of the song.
Usually, these royalties are paid to the rights holder(s) or to collection agencies, but it seems that two men have taken advantage of the system and have allegedly stolen $20 million worth of royalties from YouTube over the past four years or so. This is according to court documents which mentions a company referred to as “Y.T.”.
While YouTube wasn’t specifically name, Gizmodo notes that the same monetization and content ID mechanisms are used, so there is a good chance that this could indeed be YouTube.
That being said, how this ended up happening was the men reached out to a company called “A.R.” who helps “Y.T.” with their royalty payments.
The men said they were from a company called “MediaMuv” (which they setup themselves) who owned the copyright to a library of over 50,000 songs. They then signed a contract with “A.R.” who tagged and uploaded the music which helped them claim the royalties from the songs. For some of the tracks that were tagged as being owned by “MediaMuv”, they managed to collect as much as $100,000.
IRS agents eventually caught up to the pair where they were arrested, and if found guilty could face a cumulative 37 years in prison and up to $250,000 for each felony conviction.