I can't see yet how this arrangement will work in practice (probably it hasn't been worked out in detail by the YouTube owners, either), but this announcement should certainly please the most creative video contributors to YouTube. I hope this will materialize in a race to the top in terms of overall quality and originality of the videos uploaded on YouTube (of which it should be now clear that I am a big fan!)- could be a great proof that markets work without specific regulation on quality, if you provide the right incentives.
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