Earlier quoted context omitted.
Not sure it was ever youtubes desire to shut it down. Why would they, as there are a multitude of reasons why someone would want a video off a platform. It was the RIAA's, since there the ones who sent the takedown.
This year AlphaGoogle has an initiative to kill ad-blockers. To that end, Youtube now aborts playback after 60 seconds if it cannot contact its ad server to play commercials. It's clear where this is heading: 1) Youtube will go after software like yt-dlp to ensure only AlphaGoogle-sanctioned players can play its videos 2) Youtube will encode commercials directly into the videos it streams Both will come to pass. It's…
They stream the commercials separately on purpose, because this makes it a whole lot easier for them to track ad impression metrics. Splicing the ad within the same feed is technically quite feasible and indeed almost trivial, it doesn't even require a re-encoding of the entire video. So we can assume that they're avoiding that for a reason.