Tess Vigeland: YouTube gets a lot of flack for having a lot of videos about nothing. But there's a lot of creativity there, too. Mash-ups of old TV shows. Amateur musicians playing popular songs. Of course, those two examples incorporate copyrighted content, which means the copyright holders might try to block those videos. But more and more, they're choosing to make a little cash instead.
Sean Cole has our story.
Sean Cole: There's a video of me on YouTube singing karaoke at a birthday party.
Cole, at computer: So we go to YouTube...
Which is embarrassing enough.
Cole singing "Daydream Believer"
Adding insult to atonality, I am also now -- indirectly -- a source of revenue. Because about 12 seconds into the video...
Cole, at computer: Right there. An ad for Caravan.com pops up. "Caravan.com. Since 1952. Have you found the best value in travel?"
It just makes me feel a bit used. But I'm not alone. Advertisers are buying space on thousands and thousands of user-generated YouTube videos that contain copyrighted content. The ads are often placed randomly by computer.
David King: Well, yeah, in general, what happens is that we operate a content identification system, which analyzes everything that gets uploaded to YouTube.
David King manages that system, which is called Content ID. And it works like this: Entertainment companies provide YouTube with scads of reference files of their songs, movies, TV shows.
King: So at this point, they've provided about 300,000 hours of content.
And the computer automatically compares every new YouTube video up against that database, both the picture and the sound. It analyzes more than a century worth of video a day.
King: So that would be the equivalent of 36,000 people -- without taking any breaks -- working 24 hours a day, staring at screens.
When it finds a match it automatically does whatever the copyright-holders want. Block the content, leave it up -- or have YouTube slap an ad on it. Then YouTube and the rights-holders split the ad revenue and everybody's happy.
David King says the number of entertainment companies going for the ads tripled between the second and third quarter of last year. And he says I should be glad about it.
King: I mean, you're singing the song because you love it. Presumably.
Cole: Oh I do love it.
King: So we really feel that it's reasonable for us to connect the use of that composition back to the original songwriter of that song.
These ads are such a win-win-win that even a staunch critic of Content ID thinks they're a good idea.
Corynne McSherry: So my name is Corynne McSherry and I am the intellectual property director for the Electronic Frontier Foundation. And I focus on litigation involving fair use and free-speech issues.
She says Content ID sometimes blocks videos that it shouldn't. After all, you're allowed to reuse copyrighted content on a limited basis for certain purposes -- like news reporting or teaching. But at least putting the ads on the videos means the videos don't get kicked off the site, which is good.
McSherry: But what we don't want to have the price of that be is a situation where everybody assumes that just because music exists in a video that you should have to get permission for it or you should have to pay, for it because in many instances you don't have to.
And some of these user-generated videos can be great, free advertising. For example, you might have seen the hugely viral video called "JK Wedding Dance." It's an actual wedding processional. Or rather, freak-cessional, in which all of the bridesmaids and groomsmen groove down the aisle to the Chris Brown song "Forever."
Always makes me cry. The video came out a year after the song did -- and about five months after Brown was charged with domestic abuse. And yet online sales for the single suddenly zoomed, largely because of a click-through ad on the video.
Jeff Dodes: I believe it was selling 3,000 or 4,000 a week, and I think it rose to about 50,000.
Jeff Dodes is head of marketing and digital media at Jive Label Group, owned by Sony. It handles Chris Brown. He says at first Sony saw Content ID as a way of cracking down on intellectual property scofflaws. But now...
Dodes: Generally, we're trying to be as liberal as we possibly can in allowing users to do their thing, but also allow us to monetize our content.
Cole: Make a little green.
Dodes: And it is little.
Cole: Oh, is it really?
Dodes: We're not talking about a ton of money here, no.
Tens of thousands, he says, compared to the millions of dollars a big-name artist can earn on tour. Still, it's money. And it means more videos are staying up.
Nonetheless, a lot of YouTube users are livid about Content ID, which does still block some content. One of them posted this note on the site a few months ago: "YouTube?" he wrote, "It should be called either TheirTube or YouLose."
I'm Sean Cole for Marketplace Money.