I don't see this affecting Youtube at all. There have been many sites with legal music video content and even better quality than Youtube, but they never take off. It's a nice site though. I think it would pose a threat to Launch/Yahoo Music way before anything else.
it will never succeed youtube is everywhere... i mean there is a button right above this box i'm typing in to post a youtube video... that is why no one is going 2 over take it