“…by submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube’s (and its successor’s) business… in any media formats and through any media channels.”
Among other things, this means they could strip the audio portion of any track and sell it on a CD. Or, they could sell your video to an ad firm looking to get “edgy”; suddenly your indie reggae tune could be the soundtrack to a new ad for SUVs. The sky’s still the limit, when it comes to the rights you surrender to YouTube when you upload your video.
UPDATED: The original post from WIRED’s music blog no longer exists, but Boing Boing has the relevant information.