Agreed, more or less, but I would argue you could make a distinction for a "streaming" situation where say no more than 10% of the data is on your computer at any one point in time, vs "downloading" where the data exists in its entirety at once.
You could encode these terms in a contract or something about allowed usage of a service, I believe.
I understand now that I was talking about how youtube currently works and you two were talking about how youtube could be contrived to work.
Yes, it could. It'd only just waste more bandwidth having to redownload and cause more pauses. But people who buy things (the important ones to advertise to) have fast connections and everyone's locked in so google can focus more on advertiser issues over the lower end network user experience.
You could encode these terms in a contract or something about allowed usage of a service, I believe.