As a savvy website owner, you probably are already aware that your website needs to play within the boundaries of copyright law in order to avoid getting sued. But you're probably still wondering if it is safe to embed videos from YouTube?
Well, generally speaking, providing a link to another website is not against the law. YouTube allows users to embed videos from its site by providing the html code to do so. So you're not going to get into any trouble from YouTube specifically as long as you follow their terms of service.
I've followed the terms of service but how do you know a video itself was legally uploaded?
When uploading a video onto YouTube, the site requires that users electronically agree to host their own material on the website, and verify that there isn't any copyrighted work being infringed. To directly infringe a copyrighted work, you have to exercise one of the exclusive rights of the original copyright holder, such as reproducing, distributing, creating a derivative, or publicly performing or displaying the work. So providing a link to an infringing copyright would not be considered direct infringement.
YouTube houses a Copyright Center which provides links for both users, uploaders, and copyright holders to learn more about how to abide by the copyright rules and report any infringing material. When an infringement is reported, YouTube takes down the video but also allows the uploader to defend their video. By making it easy for copyright holders to police their work, YouTube is able to satisfy Digital Millenium Copyright Act's requirement that a service does not aide pirates in infringing copyrighted work. If YouTube did not provide this service, they would be held contributorily liable for infringement.
So, to answer your question, because YouTube is so diligent on keeping up with the concerns of copyright holders, you as a third party website owner should not be held liable for copyright infringement if you were unfortunately to link to something that infringes. As a clever webside owner, though, it is good to keep informed on what copyright is so that you can avoid any of these pitfalls in the future.
Read up more on our DMCA guide.