The pain, however, is that a lot of YouTube content has been pirated. YouTube is being sued by Viacom for copyright infringement. Unlike other lawsuits, such as click fraud, Viacom is a major industry player with at least as much financial resources as YouTube to stage a court fight. They know who to talk to about the limitations of certain types of infringement detecting software, and they have a sense of what content is likely to be pirated. (I suspect that as smart as the YouTube engineers are, they don't spend a lot of time actively scanning for copyrighted content, and even if they do, they couldn't possibly know everything that is out there in the long tail.) So this lawsuit isn't going to go away. It's going to get ugly because both sides have their heels dug in.
To tie this in with the situation currently befalling Yahoo!, they have videos available for view, one can make one's own playlists, etc. While they have nowhere close to the depth and breadth of offerings that YouTube has, one advantage they do have is that their video and audio quality is generally better. Also, they've obtained the rights to all of their videos. So people who come to their video site can be assured that their favorite videos aren't going to vanish because someone pulled them for copyright infringement. This could be a selling point for Y! over YT, in that they can say although we don't have everything YT does, what we do have will always be around. By encouraging people to come to the site and patronizing the advertisers, they can afford to get more of that not-so-commercial long tail content in HQ and with all viewing rights. But this strategy depends on whether or not people are more interested in reliability than (potential) access to a broad swath of content.