Why old pen spinning videos have really bad quality

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A lot of the older pen spinning videos you'll find have horrific quality, and you would be mistaken for thinking that it was because of YouTube compression. YouTube's compression was certainly bad at the time, but for 240p it's actually higher quality than newer youtube videos uploaded at 240p. This was because YouTube used to have a video length limit that limited the final size of the video they were storing, so they were fine encoding it at a higher bitrate.

The real problem was that in the early days of the internet, for example 2007, there wasn't much in the way of properly encoded video. There were plenty of codecs around, but for the most part the average user didn't know how to install a new codec, and edited videos in applications like windows movie maker. The result was that Microsoft video codecs were used, which were horrendously inefficient and had characteristic blocky artifacts that took up the entirety of the screen. To compound this issue, they were also reuploaded to YouTube and encoded again.

Many of the raw files of spinners are actually very high quality, for example Key3 provided all his old clips which can be viewed on the pen spinning archive website: https://spin-archive.org/?q=spinner/key3

But watching say JapEn 2nd will show you massive artifacting, despite the fact it came out much later than most of key3's clips: https://spin-archive.org/u/EyjcxMIuCoxszijxlvhMI (Note the checkerboard pattern on bonkura's clip for example)

It was only after the DivX supporting Stage6 website's release, popularity and shutdown that the succeeding Xvid MPEG4 codec took off as the main codec for video sharing on the internet, and YouTube still uses MPEG-4 in conjunction with VP9. A small note on Stage6 for people who were not around for the time: Stage6 was effectively superior to YouTube in every way back then, it supported HD video when YouTube had only 240p, and the platform streamed videos faster due to the superior codec they used, they shut down because it was too expensive to run.

So yes, a lot of old pen spinning clips, unless they were directly recorded from the webcam, are pretty much fucked at the source file, it's not just the YouTube compression.