In a judgement in UMG v Veoh, a court has ruled against Universal's claims that Veoh should be held responsible for all copyright violations on video it hosted:
Relying on the statutory language, as well as the legislative history, the court concluded that all of these activities [such as encoding video into a different format upon upload to the site or the streaming of video] are covered by the DMCA Section 512(c) safe harbor. Lots of online service providers will greet this ruling with relief. If the court had accepted UMG's arguments, every web host would lose the safe harbor as soon as it made web pages available to the public. The ruling should also help YouTube in its ongoing battle with Viacom, which also turns on the continuing strength of the DMCA safe harbors.
It's a sane, sensible ruling - it doesn't remove the protection for copyrighted material offered by the law, but does shift responsibility firmly from the hosts to the producers.