What if Google, instead of blocking the stream, just reserved a portion of the revenue generated from that video, for the rights holder, equal to but not greater than the amount needed for traditional over the air licensing?
Alternatively, could they not just use the system as a response to DMCA requests? Mute out the offending portion when a rights-holder complains and leave (probably) the vast majority of videos generating ad revenue, without large portions of the video being muted pro-actively (and therefore basically unwatchable).
