I'm wondering if this is overblown, in that while it is clear that rights clearance is an issue the technical solution is essentially moderating all posts. And while that probably breaks the current YouTube business model, as I understand it from Alphabet's quarterly statements YouTube isn't even breaking even today.

I get that it would massively reduce the 'new content stream' but for their commercial clients things wouldn't change all that much. It would also eliminate unlawful video completely since everything would be pre-screened.