This post was written by FMC intern Danny Weiss.

Since its birth in 2005, the nature of YouTube as a platform for (just) homegrown video has undergone some seismic shifts. The site is now home to more media than almost any online streaming platform. Cute kittens and The Beatles (OK, little kids singing The Beatles) are now only a single click away.  

With such rapid growth, YouTube has made serious strides in the way they monitor the content uploaded to their servers. YouTube is now home to licensed movie trailers, music videos, tributes and a whole host of other content; 48 hours of video is uploaded every minute. So what about the unauthorized posting of copyrighted music? Well, it might be difficult to put the toothpaste back in the (you)tube, but there are now more options for creators and rightsholders.

Compensation is an important aspect of controlling one’s work. So is the ability to say “no” to a use. To this end, YouTube created its Content ID system. In 2008, we got Video ID, and in 2010, YouTube rolled out the whole bundle, audio included.

Basically, YouTube has two banks of content. The first is publicly accessible, user-uploaded material (kittens, shaky cell phone videos, kids saying the darndest things). The second is reference files contained in the site’s Content ID database. This is where technology comes into play. By having the two banks talk to each other, all content (new and existing) is scanned and potentially matched to the site’s records of copyrighted material.

Let’s say you are YouTube user “FMCSuperFan” and you love The National. You love them so much that you want to upload a single from their last album so all your friends can hear it. Well, that’s a violation of the copyrights held by The National and their record label, and it also violates section 6d of YouTube’s terms of service. Under federal law, YouTube is required to take down material when it is notified that it is infringing on a rightsholder’s copyright. But what if, instead of taking it down, the creator or copyright owner wanted to get paid for that use? YouTube’s Content ID system could give the rightsholder more flexibility than they have had in the recent past.

Here’s how it works.

When a song — whether part of a static slideshow or the background music for a home movie — is matched in YouTube database, the site provides the copyright holder three options:  

1. Take it down. As the copyright holder, you can outright block the use of the song in a particular video. YouTube will notify the user, inform them of the infringement associated with the use of the song and tell that user the stop the use of the song.  

2. Track it. Say you don’t want YouTube to send a takedown notice to the user who is soundtracking their movie with your song, as see marketing potential as a result of the video getting some traffic. You can choose to simply track the “success” of that video by being notified periodically of the video statistics on views, demographics, referrals and engagement.  

3. Get paid. As the exclusive copyright holder, you can choose to monetize the use of your song on YouTube. Once you have chosen this option and your song is matched, YouTube will track the use of that video with ads and share that revenue with you, the artist or rightsholder.

You can see how this system might be attractive to companies that control a lot of copyrights. But what about individual artists and independents? Well, as long as you are a content owner, you can choose to engage in the YouTube partner program or register as an independent rights holder. 

We at FMC like creative solutions to complex problems, especially those that could feasibly benefit artists. That’s why we’re curious about YouTube building further off of the Content ID system. This year at CMJ, the company is announcing a new merch store for artists as an avenue to sell concert tickets, merchandise and fan experiences via Topspin, post concert listings through Songkick and sell music downloads through the iTunes and Amazon digital music stores. There definitely could be potential there.

What do these kinds of novel systems mean in terms of the overall revenue picture for artists? It’s probably too early to tell for sure, but we thought it was a good time as any to start asking some questions. That’s why we are conducting the “Money From Music” survey, which runs through October 28, 2011. We encourage all musicians and songwriters to take the time to complete it, as it will help all of us better understand an evolving landscape for creator compensation.