Oh yes, I was also running little blocks of adverts provided by Adsense and, yes, I told my subscribers that I got some money if they visited the websites of those advertisers – all of whom were interested in selling stuff to sailors.
So he's showing only one set of ads per long video, the videos take time to buffer, and he reminds the surfers that he's getting paid for every click. My humble hypothesis is that his users were getting bored and clicking for him, with no intent of buying anything -- which is not what Google wants.
I'm unable to verify this, because I've not used iTunes, ever, but based on the comments on this Tuaw post, this isn't a watermark, but simply an mp4 tag. Also, it can easily be removed by using a tag editor like AtomicParsley
So why do we have the music industry running around like crazy saying that if music is available for free no one can make any money?
The problem isn't that nobody can make any money. The problem is that the recording companies aren't able to make as much money as they're accustomed to, and are generally getting cut out entirely.
Reznor will make out quite well from the albums he publishes himself -- however, there will be far less revenue than a normal album release. This is fine, though -- even if he makes 20% of the revenue he would with a normal release, he still makes out better than if the recording company was taking its 90% cut. Less money is being sent his way, but what's going his way actually goes to him. That, and he already gets most of his money for tours and merchandising anyway. He'll never feel the hit from the drop in album sales.
The problem isn't that giving music away doesn't work. The problem is that giving music away kills the record companies. The musicians make out fine.