It's not a blank check to create a site full of blatant infringement. You have to be very naive to think Scribd really does everything they could to prevent copyrighted content from being uploaded. The kindest assumption would be that they're incompetent, but that's probably not the case. They're just twiddling their thumbs about it because it's the main driver of traffic. Hopefully they've retained some good lawyers.
This is how it works when groups grow. In a group of 5 close friends it's not hard to know when someone is joking. You all know each other's style. As the group grows the safest thing is to just not joke around lest you risk someone misinterpret your joke.
It's doing exactly what Stage6 did. Stage6 had amazing growth. The problem was that it was entirely fueled by the fact that they were hosting high quality pirated content. It's like standing on a street corner and handing out DVD rips of the latest movies for free. Of course you're going to be popular. Anyone with the balls and money to blow could do it, but why would they? It's a total gamble that you're going to sell the company before you get sued out of business.