Musicians, publishers, and record labels all make money from the music they produce through royalties. So when a song or a part 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 gets paid for the usage of the song.
Usually, royalties are paid to the rights-holder or to collection agencies, but it looks like two men have taken advantage of the system and have apparently stolen $20 million worth of royalties from YouTube over the past four years. This is from court documents that mention a company referred to as “Y.T.”.
While YouTube wasn’t specifically named, Gizmodo notes that the same monetization and content ID mechanisms are used, so there is a good chance that this could be YouTube. It looks like 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 set up) 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. For some of the tracks tagged as being owned by “MediaMuv”, they managed to collect as much as $100,000.
IRS agents eventually caught on to what was happening and they were arrested. If found guilty they could face a cumulative 37 years in prison and up to $250,000 for each felony conviction.