Good question. As a protocol for live streaming, Livepeer is agnostic to the bytes of video data that go on the wire, and what they represent. This is similar to other low level protocols and data storage formats like HTTP or JPEG, in that they don’t explicitly make any distinction between whether the 0’s and 1’s represent something nefarious.
But there are a couple layers where this can be addressed.
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The application layer - any service that exposes the streams can fight this the same way they fight it in centralized applications - via moderation, flagging, content detection systems, law enforcement, etc. If it’s illegal to distribute a certain piece of content in a certain jurisdiction, it’s still illegal, even though it’s being done through a decentralized system.
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Blockchain based curation layer. I think that curation is the perfect candidate for digital currency based work marketplace, since the jobs are small tasks, repeatable, and have a clear value. Imagine a service building on Livepeer, already paying token to transmit video. If it were important to them that the videos were curated, they could add a curation incentive, and the curation job could be picked up by a distributed work network (think distributed mechanical turk).
Over time you could imagine networks forming that provide filtering for DMCA violations and illegal content, and nodes could optionally pay attention to the blacklists that they put out on certain addresses or streamIDs so as not to relay this content through their gateway.