The Web site's live concert, streamed from San Francisco, was part concert and part variety show.
At the YouTube Live event billboard-ranked musicians and the most popular online video stars performed together on the same stage.
Will.i.am, Akon, and Tay Zonday were in attendance.
YouTube Live brought mainstream musicians together with online celebrities to show that the distinction between the online world and the real world is getting very blurry.
"It's a whole new machine now because the new machine smashed the old machine. What's the difference between me and Chocolate Rain? What's the difference between Chocolate Rain and Christina Aguilera?" asked Will.i.am.
13 million people have viewed Snosh, two guys lipsynching the theme song from a video game. 12 million people have viewed Obama Girl. 11 million have viewed 15-year old Fred.
The mainstream stars are very aware of the online celebrities.
"I am a big fan of fred," said Katy Perry.
"I am psyched to see Chocolate Rain Tay here. It's bizarre to go backstage and see all these guys in person," said one of the guys from Mythbusters.
So, while the line between the online world and the real world is blurring, the message to publishers, studios and other celebrities is becoming very clear:
"The internet is here to stay." said Perry.