Now let’s assume someone else made a video with of their three fingers wiggling—not you, but a stranger you’ve never met. And now assume this stranger puts music you wrote or recorded into their video of the three fingers wiggling.
That video now has three copyrights:
For example, Sony Records hires Whitney Houston to sing the song “I Will Always Love You.” The recording of the song is owned by Sony Records. However, Dolly Parton wrote the lyrics and melody to the song “I Will Always Love You.” Dolly Parton owns the lyrics and melody of the song.
In order for YouTube to place an ad on that video, all three copyright holders need to say it’s okay. For this to happen, the person or company that controls the song has to enter into a special contract with YouTube called a “Direct Licensing” contract. These contracts are typically given only to larger music companies, not to individual artists or songwriters. These contracts are not part of a YouTube channel deal–that is, the deal you agree to with YouTube to make money on your own videos.
The Direct Licensing contract allows the person or company to send a list to YouTube of all the recordings (“Masters”) or “Compositions” (a.k.a., the lyrics and melodies) they control. YouTube then gives the person or company the power to go into YouTube and find other peoples’ videos that have their recordings or compositions in them and do one of three things:
To help the person or company find other peoples’ videos on YouTube that have their music in them, YouTube asks the person or company to deliver a copy of the recording of the song. YouTube then “fingerprints” the recording of the song and beams that fingerprint against the billions and billions of past, present and future videos on YouTube, looking for matches.
When YouTube finds other peoples’ videos that have the person or company’s music in them, they ask the person who made the video if they have a legal right to use the music in their video (for example, the person that made the video contacted the artist and got a license from them to use it).
YouTube asks the video creator if they have the legal rights by sending the video maker a notice that gives them two choices: “Acknowledge” that you don’t have the rights, or “Dispute” that you don’t have the rights.
If the video maker clicks “Acknowledge” (meaning they don’t have the rights to use the music in their video) the video stays up, an ad goes on the video, and the artist gets paid a small percentage of the money.
If the video maker clicks “Dispute,” (meaning they do have the rights to use the music in their video), YouTUbe tells Audiam, and Audaim asks the artist if the video maker has a legal right to use their music. If the artist says “yes they do,” the video still stays up and YouTube does not pay any money directly to the artist for the music.
This same system more or less exists for the person that wrote the lyrics and melody as well.