You might not realize that the majority of cover songs on Youtube- songs that your local neighborhood tweenage girl strums and coos along to- are illegal. Thank US copyright law for cases like this. While she is most likely making the video to show off her cuteness and nubile-ness, her pimp handler is whoring out that performance for the greatest profit. Youtube uses these videos to advertise and generate their own income. Therefore, by hosting a video of copyrighted material, Youtube becomes complicit in any infringement dispute that a major record label wants to pursue. Little Susie might not have any intention of financially profiting from the video, but because she is particularly adorable, her video might rack up a million views, and anyone with a brain can smell the potential for buxxx there.
There is quite a bit of static charge building up within Youtube that is going to snap sooner or later; record larges like EMI and Universal have too much to lose when their artist gets 20 million views on youtube, but the combined cover versions of the same song rack up 100 million views.
Let me go out on a limb and propose a new system that will make me rich. If you host your own website, you pay for both a domain name and web hosting space. You pay the Domain Name Service to use the text www.gritartisan.wordpress.com and you also pay GoDaddy, XO Communications, etc for the hosting space.
Lets apply this same system to songwriting and music. Stick a middleman between the artist and the signing label that manages the composition; the label therefore only gets to protect the performance that goes on the artist’s CD. Maybe then little Susie can sleep easy, knowing that the heat won’t crack down on her at night.