How is asking them not to demon click, and editing out innocent comments about having done so, a 'look the other way' attitude? Although I'm unsure exactly what encouragement he was offering without seeing a screenshot of his members-only page, from his overall tone I'd guess it was very general, 'support your favorite site' in nature.

You are right that he was careless and didn't look after his own business interest by studying the contract carefully and thinking through the implications of such statements. If Google had mailed him saying 'look, [Content] at [page URL] is undermining our agreement' then I'd have no argument with it - and I don't think he would either. It's true that accommodating people this way eats into Google's overheads and can be abused by deliberate fraudsters, so there's an economic cost to doing so which seems to be less than the economic cost of strict mechanical enforcement (in terms of lost content and goodwill). Simply put, cash trumps content so Google is always more likely to side with the advertiser than the content creator who has deployed adsense incorrectly.

However, only lawyers have a keen interest in people's contractual interpretation abilities. Assume, for the sake of argument, that the guy made an honest mistake because he understands cameras a lot better than contracts, and like most people he just skimmed the contract and clicked OK. He's running a pretty minimal business here - it sounds like his total annual revenue from online video is about $45,000, so spending several hours studying contract terms (or paying someone else to do so) is not a very efficient use of his time. He generates quality content doing something he enjoys, and is able to make a minimal living doing so - as someone else said upthread, he was pursuing a win-win strategy for everyone, including his advertisers. So work with me for a moment in considering the possibility that he was not a fraudster.

He says he has about 700 subscribers now and has built up to adding ~120/month, 150 sailing videos in HD, and about 1 click per 200 video-minutes, for a median CTR of 6%. New members will of course spend a day or a whole weekend browsing his library (probably looking for footage of places they live/d or sail themselves), but we can figure that any spikes in ad traffic will come after posting of a new video. 6% of 700 subscribers clicking on an ad is...42 per ad. The 6% is certainly high, but given the extremely specialist nature of his sailing website you'd expect a somewhat greater yield. My personal ad responsiveness is heavily skewed towards sites offering specialist content that I'm interested rather than general-interest ones. Anyway, if there were 3 ads in the adsense box and they all got a 6% CTR, that's 126 clicks per video. As there is a time overhead to video production, that's happening at most a few times a week (for short videos), more typically a few times a month. He mentions getting about 30k hits/month from the sailing site, which is consistent with ~700 people watching 1 or 2 videos a day. At a median 6% CTR that's about 1800 clicks per month. Now we can't be sure how much this amounts to for him or for his advertisers; I'm sure it's yielding more than the YouTube content does (for obvious reasons), but his statement that the bulk of the adsense income comes from YouTube seems quite reasonable. I'm guessing that the most adsense revenue that could be coming from his sailing website is about 10% of the total, maybe $200/mo.

Some of that is legit traffic; maybe $100/month is the result of over-enthusiastic supporters who click on every ad as a matter of habit, out of a total adsense payout in the region of $2000/mo., the bulk of which comes from mass-appeal videos on YouTube over which the guy has zero influence. So in the worst case, Google sees a ~5% discrepancy in the revenue being earned by a content creator with two subject categories, each of which have 100+ video offerings. Suspecting a ~5% overpayment, they withhold all payments for the previous quarter - apparently extrapolating the margin of the overpayment to the lifetime traffic of the sailing site - and cut off the relationship completely. Although their contract allows them to do this without explaining why, and there are good reasons for them to have that option available, the result is a loss of about 40% of the guy's annual income. As described, that economic hit may well be greater than his overhead in operating the boat and producing the sailing videos, so even with steady growth in subscriptions and their ancillary revenue (amazon ads), it'll take a good 6 months - 1 year to rebuild that income stream.

That's a very big kick in the teeth to give someone because you think there's a 'risk' they're not using Adwords in the intended fashion, even though the benefit they may have derived (and conversely, the potential loss to your advertisers) is marginal at best. Unless he was putting a 'don't forget to click hint hint' statement on every new sailing video posting, his moral failure is surely limited to that fraction of his pages where he has made such an exhortation. And even if he made no such exhortation, some 'loyal fans' are going to click on every ad to support the site anyway, unbidden. I've done it - not on any significant scale, but in hopes that it brings in a little extra revenue for a site I like, maybe 10 clicks once a week. Users sometimes drive each other to do the same thing, eg by leaving comments visible to others, which may stay up for a day or even several days (quite likely in the case of a person living on a sailboat part-time).

The absurdity that would result if you took Google's contract terms to their logical conclusion would content creators pro-actively studying analytics to understand their user behavior and throttling their access or hiding ads if they seemed like they were supporting the site too consistently or encouraging other users to do so too explicitly (people on web forums sometimes respond to advertisers they dislike by encouraging others to click heavily and increase the advertiser's cost of doing business). Of course Google doesn't want people to do that, and hiding ads from some users might violate the adwords agreement in other ways. But over-rigid enforcement of the 'no encouragement' terms creates an incentive for such behavior.