There is open-source software (mencoder) which will convert videos into formats playable by the Flash Player. However, all such formats are encumbered by patents with expensive licensing fees.
Either YouTube uses these formats without a license, or they pay up. They may use commercial encoding software which includes a license, or they may use an open-source encoder and pay for the license separately. YouTube is a big target for a patent infringement lawsuit, so I'd guess they do pay up.
Either YouTube uses these formats without a license, or they pay up. They may use commercial encoding software which includes a license, or they may use an open-source encoder and pay for the license separately. YouTube is a big target for a patent infringement lawsuit, so I'd guess they do pay up.