www.blogmaverick.com/2006/10/30/some-int...google-youtube-deal/
Of the $1.6 billion Google is paying for YouTube, $500 million is being kept in Escrow to deal with copyright lawsuits. Google intends to have out of court settlements wherever possible.
Vivendi's Universal Music Group, Sony and Bertelsmann's jointly owned Sony BMG Music Entertainment and the Warner Music Group each quietly took a small stake in YouTube worth $50 million dollars, apparently paid for by the $500 million copyright fund.
These companies were paid off so that they would not attempt to sue YouTube over copyright infringement for a given amount of time (estimated to be six months). This gives YouTube some breathing space and allows it to continue to grow on copyrighted content.
Google also encouraged these content owners to sue other video sharing sites (Bolt and Grouper sued by Universal) to thwart their growth and make investors uneasy about backing video sharing sites. This goes on while YouTube continues to use copyright content to grow its user base.
The $50 million was paid to the content owners in equity which allows them to avoid paying any royalties to the actual content producers. This is because it appears as an investment, rather than a payment to use content, therefore content producers don't get a dime.