Which I believe streams YouTube video and then analyze the music and get the beat…
The question now is, is this legal? He is monetizing on copyrighted YouTube videos.
If the above mentioned is illegal, will this approach be legal in any way where user finds their own YouTube videos, copy and paste into the app and stream it?
The main diff is that the first approach provides link to copyrighted videos and the second one will be you find the link yourself
Yes, by law all gaming companies must pay licensing fees to use other artists’ work in their apps with the exception of CC licences etc… The problem is, it is not very enforceable. Digital copyright law(regards streaming) states that if a copyright owner pursues someone for using their work without permission they will be forced to remove the work from their product/offering, they may not necessarily have to pay out the creator unless they decide to continue to use the work. This is how streaming media outlets are getting away with not paying enormous sums of royalty money to streaming artists. Many artist are losing out right now because they don’t have the resources to track usage on the internet.
If you are caught using copyrighted work for a commercial product. ie: Audio integrated into a game(not streaming) you will be liable to compensate the copyright owner, which often can be more than one entity!(Artist, Songwriter, Record Label, Publishing Company)
Moral of the story is, if you are creating games, media etc… and want to use other peoples work in your project, be sure to be transparent about what you are doing and offer to compensate the artist. Creators should simply consider making ethical choices. Also there are always other licence free, paid stock or canned options for media content. This all falls under the “Don’t be a Douche” category Hope that helps!
Hope that helps!