Redisplaying YouTube content on other websites is explicitly allowed. Ads run in the embedded player, which they made easily available and usable on purpose.

What is NOT allowed, as far as I know, is using their API and player to make a website that does nothing but show YouTube content.

Last time I checked if all your are doing is repackaging their content but not adding any other content of substance to the page, it is against the TOS. This was a couple years ago but that was my understanding.

Yup, they can block your domain from embedding if they want.

They do make it tricky to monetize, though. IIRC, you're not allowed to accept payments or show your own ads alongside the videos.

It is actually not against their TOS to accept payments or run additional ads alongside their content.

It might be, depending on what else is on the page. Clause 4(d) of the Terms of Service[1] reads:

"You agree not to use the Service for any of the following commercial uses unless you obtain YouTube's prior written approval:

- the sale of access to the Service;

- the sale of advertising, sponsorships, or promotions placed on or within the Service or Content; or

- the sale of advertising, sponsorships, or promotions on any page of an ad-enabled blog or website containing Content delivered via the Service, unless other material not obtained from YouTube appears on the same page and is of sufficient value to be the basis for such sales."

[1] http://www.youtube.com/static?template=terms

I subscribe to Avdi Grimm's excellent RubyTapas series, and the biggest pain about it is the lack of a web viewer. Google seems to be explicitly disallowing him to use YT, and that really sucks. Anyone looking to make and sell videos has to put them on Amazon or whatever and make you download them.

If those videos were available to be purchased from his site, or if you could subscribe to his site to get premium video content, do you think that you would do that?

I already pay nine bucks a month for the subscription. I found user-made scripts to download the files on his site, and did so, but that's not a real solution because I don't like storing that kind of stuff on my laptop, and Dropbox or whatever isn't any better than just getting it from his site, save having them in two places. I'd definitely pay more for a web viewer.

That last one seems to the be the kicker, right? Interesting...

I've built something a little bit more fleshed out, actually... How about a site that lets you search and watch videos at the same time. And also does Vimeo. And lets you save them to personal collections. Here you go. http://huzzaz.com/search

This is very cool! The interface should get a little more love, though?

YouTube only shows ads in the video right? Looks like those are still being shown.

Nope - they run homepage banners, sidebar ads and occasionally full-page adverts (that hijack the background). It's surreal browsing without Adblock occasionally.

Not to mention the ads shown next to original content created by youtube creators earn them a living.

Ads displayed around the video are almost always tied to the ad displayed on the video and ads displayed on the video are part of the revenue-sharing program.

Hmm, interesting. I get sidebar ads occasionally, but I've never noticed the other ones - maybe I just tune them out when I see them. (I use ghostery, but disabled it temporarily for testing this out.)

Wow. I wonder how much I miss while using Adblock. That sounds miserable.