The problem is then that the only possible way to implement that is crowdsourced voting/flagging, and enough people out there don't get some kinds of art that they would flag it that way. I think most controversial modern art would not survive on a platform like Youtube where everyday people make a determination on the palatability of it.
It is entirely possible that the numbers don't work. From a business point of view if the only downside is that some art videos get incorrectly categorized then correctly categorized after a manual review then reworking their business model doesn't make much sense.
This is bad PR for sure but I don't think the system is failing that badly. The rate at which video is uploaded is truly stagerring, and that's assuming that the successes of the automation deters many bad actors.
You are wrong. You do not understand how much media is being uploaded to Youtube. All of Mechanical Turk working together simultaneously could not filter all the stuff being uploaded. 300 hours of video is being uploaded to Youtube every minute. [0]