If you're going to be working with more than the occasional video on your site, it's well worth installing a plugin to help display and manage them. One of the most powerful for managing videos is wordTube because it creates its own library from which you can create various playlists. It also handles audio files and lets you upload your videos as well as pasting URLs from third-party video sites like YouTube. Another very popular plugin that handles both audio and video is podPress, although at the time of writing it hadn't been updated in quite some time.
If you want a very simple way to manage links to videos on third-party sites, Viper's Video Quicktags is a popular plugin for that. It creates buttons on your Text Editor for a number of popular video sites, such as YouTube and Vimeo, while giving you lots of customization options for the display of the videos.
Many video plugins for WordPress rely on the JW Player (www.longtailvideo.com) to display video files. Although this player is available for free, that's only for non-commercial use. If your site is commercial (check the JW Player terms), you'll need to purchase a license. If you have multiple commercial sites, there are generous discounts for multi-site licenses.
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