OK. thanks, I see what they are doing, makes sense. I wonder if it matters if the album is uploaded from the label or an individual user, for instance most all of the "moody blues" albums have been uploaded by one user, maybe EMI (the copyright's holder) just notifies YT and starts collecting. I would think that the labels would want to upload low-sampling rate copies do discourage people from wanting to strip out the audio (if that's possible) from a flash or HTML5 format.
Youtube has an automated scanner, and if their robot determines the material you uploaded is copyrighted, you get notified, but nothing happens at that point. If the record company makes a claim on it(does Youtube rat you out?), they can decide to put ads on the video, with them being the beneficiary. They also have other choices, like limiting geographical region, stripping audio, and probably some other things. If you get too many complaints on your account, your account can be banned.
Grabbing audio/video is easy, and I've done it for rare stuff, but torrents are trivially easy also, and that's generally what people will do.