Company publishing my work before offering me position Watch

KatWheeler
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This is a bit of a long one.

I'm a second year English student who has been looking for internships to help me build a career in journalism. I found an intern position as an Editorial Assistant with a small women's magazine for the summer, and so applied with my CV, cover letter and links to previous published works.

I got to the second stage where I was asked to write an article for their April edition as a way to assess whether I was good enough for the position. I wrote my article, but whilst I was researching the company to see what their style was, I noticed they made a few campaign videos. These videos were really badly done, just texts on gaudy coloured backgrounds with terrible royalty free music. I have a successful YouTube channel which I work on in my spare time, and so am pretty capable with video editing, though no where near professional level. I decided that I would give reworking one of their videos a go, to attach alongside my article so as to demonstrate my ability to take on different kinds of projects and generally be a valuable intern and asset to them. I introduced the video with this:
In addition to my interest in journalism I have successful experience in social media, particularly video formats and so decided to rework your video for the 'You Are Beautiful' campaign. I wanted to demonstrate my ability to work successfully across multiple mediums and found the 'You Are Beautiful' campaign inspiring. I have uploaded an unlisted sample of the video to YouTube.

So I sent off my article and video, which was clearly labelled as a sample video unlisted on YouTube. The reply I got was this:
'We have looked at your article and very impressed with your video which we will use for the project.'. They also offered an interview in three days time which I am unable to make.

I was a bit taken aback as there was no feedback on the article, and was slightly put out that they assumed they could use the video without offering me a position. My next step was to reply asking to rearrange the interview, but I also asked for feedback on the article, as that was the main part of the application and the reason I would be interning with them. The reply I received from them ignored my request for feedback and just asked for a link to the video, as I privated it after the first email they sent me regarding using it.

So this is where I am now. I am unsure of what step to take next. I am unwilling to just allow them to use the video, firstly because it was a sample of an extra skill I have, and secondly: they have not offered me a position of Editorial Assistant intern, so I do not want to give them free work.

I am just an amateur so I am unsure of whether I should request payment, and if I should, how much? And would also like to know your opinions regarding the company, do you feel they are behaving appropriately?

Thank you for any help you can offer!
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