Most people have extremely weird ideas of what's considered piracy and what isn't. Downloading a video game rom is piracy, but if you pay money to some Chinese retailer for an SD card containing the roms, that's somehow not piracy. Exploiting the free trial on a streaming site by using prepaid visa cards is somehow not piracy either. Torrenting an album is piracy, but listening to a bootleg on YouTube isn't.
YouTube noticed this at some point and is now happy to let everyone know how much pirated music is available on their site. One of their main points for shilling YouTube premium is how their music catalogue is way better than Spotify. Of course the piracy site has more. That's always how it works. Spotify actually has to license the music on their platform and is subject to copyright law. They can't just get the Neil Young discography from soulseek one day and wait until his estate notices, facing no repercussions whatsoever aside from agreeing to a takedown request. Imagine if Pirate Bay or Napster were considered completely above-board businesses just because they took down torrents if explicitly requested by the copyright holders.
Not that I'm complaining especially when a lot of the music on youtube isn't publicly accessible anywhere else. It's just been extremely strange to see this go from an "open secret" to something they're shouting from the rooftops and face no repercussions for. In the future I want everything to be like that and I'd rather keep youtube how it is than see them get the punishment that by all rights they should be getting. It's just so strange that this is the position things have ended up in.
Note: The following text is intentional abuse of the tagginator bot. Fuck you.
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They have to pay for anything official.
The rest is the "safe harbor" provision of the DMCA. Effectively, sites aren't liable for user generated content if they respond to official DMCA takedown requests in a timely manner. YouTube also goes beyond that to directly work with copyright holders to preemptively remove infringing content with content ID, which scans everything for violations, and their own tools to report infringement. They don't need to do that for the DMCA protection, but it's probably cheaper at their obscenely large scale.