I think what they're saying is that you have to accept their contract and their small amount of revenue and control in order to have a Youtube account and get paid for ads run with your stuff. The artists with the majors get better terms - although who knows if the big boys pass all of that across?
Otherwise you can bugger off, and no money for you. Of course at that point you can respond OK, fair enough. We don't agree terms. So I'll remove all my content from Youtube. That's fair negotiation after all.
But what Google then say is. Oh dear. Sir doesn't appear to have a Youtube account. No account, no content ID. So you can't use our automatic anti-piracy tools. It would be such a shame if loads of our users were to put up your content for free, and we get all the advertising revenue anyway. And you're left with fuck-all, and we still get your work. Oh of course we're not doing this deliberately. Of course we'll comply with the law. Ahem. You'll just have to search Youtube every few seconds, and put in a DMCA takedown for every instance of pirarcy, and we'll take that down after a few days.
What Google are saying is deal with us and we screw you. Don't deal with us and we screw you harder.
Youtube was always build on stealing other peoples' content. That's what made it popular, as a way to see stuff people had recorded. Sure you also had people uploading original stuff too, but it's always been a place to see copyrighted content for free. That mattered less when Youtube were a startup - that never made any money. Artists and content owners were sort of losing out, but as there was no real alternative, or revenue stream, they probably weren't losing much. And it's not like anyone else was getting paid either, so they weren't being stolen from - so much as maybe losing a potential opportunity for other revenues.
Then Google bought Youtube. Suddenly it was a different kettle of fish. They had to clean their act up somewhat, as Youtube was full of other peoples' stuff. But now Google owned it, and Google have money. But also Google bought it to make money. So they shoved advertising all over it. And they were forced to build tools to help copyright owners, as they were now knowingly making cash from other peoples' stuff, with no rights to it. OK Google still weren't uploading it themselves, and could try to argue they weren't responsible, but that was a pretty thin argument.
But it seems now they've decided they're powerful enough to try to go back to the old way of doing things. They've bought off the majors, who have many lawyers. And now they're trying the protection racket on the indies. "This is a nice shop you've got here. But these books are very flammable. It would be a shame if something was to... happen to them... Like a fire perhaps... Oh no! We wouldn't dream of doing anything like that. But you see those guys over there... Well we could help you control them, but well... That'd cost us you see... So hand over most of your money or else."
Google are pissing off so many people, in so many areas at once. It can't last. Despite all that money they pay to politicians, and their army of supporters, they're still cruisin' for a bruisin'. In the end there'll just be too much pressure to do something. The EU are looking likeliest. Axel Springer's support for his candidacy was what got Juncker the gig as EU Commission President. Merkel would probably have blocked him without the outcry in the German press. And that favour has been repaid already, as the new Commission have made much tougher noises in Germany. But then online privacy and data protection has been a huge political issue in Germany for the last 15 years anyway. The French don't like Google for being American, and the association with the NSA hasn't helped anything, so I suspect the EU may clip their wings somewhat. And because they compete with the mainstream media, who are getting increasingly desperate for revenue, it's going to be very easy for them to whip up some anti-Google publicity, and get the voters onside.
In my opinion Google are Microsoft of around 2000. Anti-competitive, arrogant, bloated, rich, but woefully ignorant/careless about security, making way too many enemies at once and risking massive damage to their public image that will take decades to recover from.