From Billboard’s groundbreaking decision to factor YouTube views into the charts, to the “Harlem Shake,” to the historic agreements covering UGC content and Vevo videos, YouTube is becoming the mainstream music business.

Yet, the ugly truth is that there are currently billions of streams of music being watched by millions of people on YouTube, for which songwriters and their music publishers are receiving no money.

Ever see a wildly popular a capella version of a hit song sung by a teenager?  How about a short musical parody on YouTube? Chances are that the company distributing those videos is a Multi-Channel Network (MCN), paying little or nothing to songwriters and publishers.

MCNs like Maker Studios and Fullscreen Media are aggregators of original content on YouTube. There are hundreds of them currently operating, garnering tens of billions of views a month. With backing from Google, Silicon Valley venture capital firms or large media companies, MCNs are distributing hundreds of hours of music related content and selling tens of millions of dollars of advertising, with almost none of it going to songwriters and music publishers.

Like a record label signing an artist, MCNs sign video creators to deals that give the MCN rights to produce, market and/or distribute the creator’s content on YouTube.

With deep pockets and an appetite for eyeballs, MCNs are acquiring content so quickly that now virtually any YouTube video with an audience is now distributed by one of them. As TV viewers migrate to the Web, I’ve heard the media refer to MCNs as the next Cable Television. That could spell trouble. Cable TV pays millions to songwriters and music publishers every year. MCNs? Virtually nothing.

Last year, the National Music Publisher’s Association, on whose board I sit, reached an agreement with YouTube covering user-generated content created by amateurs and uploaded to YouTube; an historic achievement.

The thing is, MCNs are not covered by the UGC agreement because they are members of the YouTube Partner Program: a special designation that allows them to receive advertising opportunities and other services from YouTube.

To become Partners, MCNs agree to clear the rights to all music they use and indemnify YouTube against any claims relating to music. Once that happens, a songwriter or publisher making a claim needs to go to the MCN rather than YouTube. There is no notification process in place to inform rights holders that a video has been signed by an MCN.

Concerned that MCNs may be streaming your content without licenses? Good luck finding out. YouTube’s Content Management System, which tracks content on YouTube, does not flag MCN content. While YouTube’s matching and fingerprinting technologies pick up MCN videos, the matches are not disclosed to rights holders. The only way to find an infringement is via manual search by individual video; even then, in the thousands of searches we’ve done for MCN content, we’ve never seen search results appears if the name of a song is not in the title of a video.

Infringements aside, how good have MCNs been about getting licenses for the music they broadcast on YouTube? In a word: abysmal. Maker Studios signed a deal with only one major music publisher two weeks ago. It has been in business for over 4 years, building huge audiences streaming a capella videos. Fullscreen Media, another leading MCN, has agreements with only two of the majors. Neither MCN has licensed more than a handful of independent publishers, and the terms of their agreements with majors have not been extended to the trade. Both companies should do so immediately and NMPA will be enforcing its rights to make sure that they do.

Until then, herein lies the irony of the YouTube landscape: If a 6 year old kid sings a song and puts it on YouTube, the writer gets paid. If she’s any good and actually obtains an audience, an MCN like Maker Studios — with $35 million in VC funding from Time Warner, the Murdoch family and others — will sign her. Then, the money stops flowing to the writer, whether the video stops streaming or not.

Multi-Channel Networks have raised millions of dollars of capital, aggregating eyeballs on the backs of songwriters. It’s time for them to clean up their business and pay a fair price for the music they use. [Billboard.biz]

Editors note: YouTube, Maker Studios and Fullscreen Media declined to respond.

Matt Pincus is founder/CEO of SONGS Music Publishing whose writers include Diplo, Dev, Conor Oberst, The Mowglis, and many others. Pincus is also member of the Board of Directors of both the National Music Publishers Association (NMPA) and ASCAP.