A loophole
Interesting that the droid from YouTube described this as "a loophole" though. Wonder if they'll close it at some point.
Mind you, the more important point is that - as I understand it both from the transcript and from reading about this elsewhere - you can go down this route, but the consequences are:
1) that they'll track content for you, but won't take it down (so you have to be constantly issuing DMCA takedown notices if you want to manage your content/presence on YouTube, etc.)
and
2) not only will they not pay you if a third party uses your content, but they won't pay you if you use it yourself either. So if YouTube was one of your existing revenue streams and you want to keep any kind of revenue from it at all, you have no option other than to sign up and accept whatever terms they want to shove at you. Including all the restrictive crap about simultaneous releases, having to have all your material on Music Key if you want it on YouTube, etc.
So, as agreements go, it still stinks to high heaven. And Google trying to imply to the press or media that the person complaining about this is somehow lying about it or has got it wrong when the transcript makes it pretty clear that the things she is complaining about are - largely - true (give or take a "loophole") just stinks even higher. As Lowery's article points out, it's not vastly different from the pile of festering dung that Google/YouTube gave the indie labels.
Biting the hand that feeds IT
