They have a pretty solid abuse and copyright department, which responds to DMCA notices in a short time. This helps them stay up and running without much legal problems.
Occasionally they face legal problems (probably everyday), but they have a pretty decent legal team (Google!), and handle those problems accordingy.
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Youtube does comply with the DMCA. If you report a copyright infringement to them, they remove the content.
If someone sues Youtube, they're suing Google. Google brought in over $4 billion in the last quarter, so if you're going to sue them, you better be prepared for huge legal costs, and probably bad publicity for your company too.
It's not only youtube, but how about the warz sites that in my opinion are much worst. One popular warz site offers every movie and software imaginable. Why these sites are still online and the users downloading haven't been busted is beyond me.
Last edited by Lumix; 11-08-2009 at 08:14 AM.