Lots of people want YouTube and it is on track to lose nearly $500 million this year. The fact that Google bought it doesn't mean they've created a business.
Build something people want. That's not good enough.
Build something people will pay for. That should imply enough want and will keep you around long enough to keep providing it.
That was all part of the business plan though - there was a light at the end of the tunnel, and they knew what it was. Whereas I don't think anyone knows how to make money off of YouTube.
"In June 2008 a Forbes magazine article projected the 2008 revenue at US$200 million, noting progress in advertising sales."
We know two things for sure: a) youtube IS making money b) youtube is making money in tens of millions.
What we don't know--and what makes the argument that YouTube is a financial burden on google very difficult to prove--is the knowledge of YouTube's expenses.
I would definitely agree that there is a time and a place to debt-spend your way to profitability.
But consider the fact that some companies, even once they have hit the ball out of the park with thier original goal, still have no way to be profitable doing it.
At some point YouTube becomes a public service charity, not a business.
Also, don't forget that it is the same fiddling around that leads young people to develop products that older folks could not come up with.
YC has a t-shirt that reads "Build something people want."