It would appear that YouTube is basically now the world's largest backup of karaoke and music videos, and when we need a local copy, we simply use a service
like this(or many others) to convert them back to MP4 videos. Converting them to MP4 files on your laptop also insures the crowd never has to watch YouTube's commercials.
Before anyone mentions legality or fears of repercussions, I first have to say I'm not a lawyer. However, I honestly don't think YouTube cares. Especially for small gatherings in bars and restaurants. They know all the KJs and VJs on the planet won't put a dent in their revenue. Besides, they also know that if you watch a karaoke performance or music video at a local venue, odds are, you will watch it in your spare time, and unlike your local KJ, you don't have the time or the hard drive space to bypass all their commercials and will simply put up with it on the phone in your hand. That's all they're worried about. KJs actually help YouTube in this manner. YouTube is large enough (and wise enough) to not legally threaten every town's local KJs, VJs, and DJs. It would not end well for YouTube, and they know it.