The latest case of a popular YouTube blogger being sued for using music by other artists in her videos without permission raises the question of who really benefits from the re-use of music.

In a claim filed this month, the electronic dance music label Ultra Records allege that beauty blogger Michelle Phan’s videos infringe their copyrights in nearly 50 cases.

Phan is a self-made internet star who began posting makeup and self-help tutorials on YouTube in 2007. She has more than 6.7 million subscribers on her YouTube channel and has made a career from the associated advertising and endorsement revenue, book deal and even her own line of makeup.

Where’s the harm?

Ultra Records want a slice of this pie, and here’s where things get interesting.

In copyright cases, courts try to work out how much harm has been caused by the infringing uses. Sometimes, this is not easy ― some infringements might actually promote and boost sales for the artists whose work is used.

Phan argues that her intention has always been to “promote other artists, creating a platform for their work to be showcased to an international audience”.

At least one of Ultra’s artists agree. Kaskade, a Grammy-nominated artist whose songs feature in many of Phan’s videos and are central to many of Ultra’s claims, has publicly defended Phan in a recent Tweet.

Kaskade’s support of Phan is not surprising, and not the first time he has spoken out against his label (now owned by Sony).

Last month he described copyright law as “a dinosaur, ill-suited for the landscape of today’s media”. Kaskade was frustrated after Soundcloud’s automated algorithms mistakenly removed his music for copyright infringement.

Damned by default

Ultra does have one advantage over Phan. When courts in the US are unable to calculate the harm caused, they can rely on a default penalty of up to US$150,000 for each infringement.

This explains, for example, why record labels have been able to win extravagant claim such as the US$1.5 million award against Jammie Thomas-Rasset for filesharing 24 songs (eventually reduced to US$222,000).

Ultra is asking for damages of at least US$15 million for Phan’s use of their music (because the copyrights are divided between two companies, both Ultra Records and its publishing arm, Ultra International Music Publishing are able to make separate claims for the same songs).

This is a fallback position - they are hoping that a court will assess their share of the profits from Phan’s videos, viewed 150 million times, at an even higher rate.

Phan’s spokesperson has stated that Phan did actually have Ultra’s permission to use the works and now intends to file a counterclaim against the label. All of the facts will eventually come out as the case proceeds to trial.

How labels embraced copyright on YouTube

In a way, the most surprising thing about this lawsuit is that it’s happening at all. In many cases these days, labels tolerate and even encourage the use of their music on YouTube videos.

Even companies such as Disney have learnt to take a more relaxed approach to what is technically copyright infringement.

Fans of the smash hit Frozen created more than 60,000 covers of the song Let it Go, and Disney has generally opted not to sue or take down the videos on YouTube.

Twenty-year-old singer and makeup artist Kota Wade derives a good proportion of her primary income through use of Disney’s intellectual property. Her YouTube channel has more 74,000 subscribers, and her most popular videos include her covers of songs from Frozen and makeup tutorials on how to look like princesses from the film.

Disney has not taken any action against Wade and appears to have embraced YouTube’s role in increasing demand for its films.

Monty Python came to a similar conclusion. Rather than continue to fight fans who unlawfully uploaded their videos, the com chose to create their own official channel on YouTube. Unsurprisingly, sales of their DVD box-set soared as a result.

Over the years, YouTube has also worked hard to find ways for copyright owners to split the advertising revenue from viral videos that contain their music. Copyright owners often have the choice to split the advertising revenue instead of taking infringing videos down.

These options help everyone win. Labels and musicians get a share of the advertising revenue and increased exposure, creators are able to publish their videos and sometimes make even make a living from them, and the public gets access to a wealth of creativity.

A lose-lose case?

By contrast, nobody wins when these cases go to court.

As social media continues to become more and more valuable in promoting music and more YouTube entrepreneurs are able to make a living from their videos, we are likely to see more of these problems emerge.

It’s likely that pro-bloggers can look after their own commercial interests in these disputes. But we should be more worried about ensuring that copyright laws and business practices enable amateurs to thrive and sometimes to make the entrepreneurial move to becoming self-made social media stars.

We can only hope that better licensing mechanisms can be developed so that those involved can come to mutually beneficial agreements.