Maybe I'll actually write something more substantive on the subject, there's a lot of depth to it. For now I'll just point out that many young creators in video are falling into the youtube sphere of influence.

A lot of independent video producers have switched from using their own proprietary video distribution systems to merely hosting their videos on youtube. The monetization difficulties are made up by the ease of distribution, network effect, and lower costs.

Also, there are a fair number of kickstarter projects where the end result is the creation of videos on youtube (such as Tropes vs Women). Within the Film & Video category on kickstarter many projects in all sub-categories will release their content on youtube and the webseries sub-category is almost entirely youtube projects. If youtube had better monetization models and improved ability to host paid and unpaid content almost all of those projects would host on youtube.

Consider the many musical acts that have risen to fame through exposure or maturation through youtube. Walk off the Earth, Julia Nunes, Pentatonix, and of course Justin Beiber being just a few examples among many.

Consider that Bon Jovi's song "Living on a Prayer" recently made its way back to #25 on Billboard's charts (27 years after release) almost entirely due to the popularity of a viral video on youtube of a fan at a Celtic's game dancing enthusiastically to the song.

(Edit: also look at the importance of youtube in the most widely heard pop music such as Psy's Gangnam Style, LMFAO's Party Rock Anthem, Lady Gaga's Bad Romance, Gotye's Somebody That I Used To Know, etc. It's clear that youtube is as culturally relevant as MTV ever was, and that's just a tiny fraction of youtube's influence on the world.)

Or consider the veritable ecosystem of new funding platforms springing up to help creators using youtube to monetize and support their work (such as subbable.com, tested.com). Google's idea along these lines is to introduce pay walls, whereas almost every creator prefers to use more of a pledge drive / premium level model.

Google has tackled the technical bits of web video quite well. They built a system that handles video uploads at greater than 6,000x real-time (over 6,000 seconds of video are uploaded to youtube every second).

Youtube alone is responsible for nearly 1/5th of all internet traffic.

Stop and read that again, it's important. 1/5th of the usage of the entire internet is being dedicated to the use of youtube. And that figure is growing by double digit percentages year over year.

Unquestionably people are increasingly spending their video viewing hours watching content on youtube. And creators are increasingly turning to youtube as their distribution platform.

So yes, I'd say it's fair to say that there's a very strong case that youtube is the future of video. And yet google still treats it as a hindrance, as a second class citizen. As mentioned above creators are desperate for tools to help them support and monetize their video making but they have to turn to 3rd party services to do so. Google has the expertise and capability to offer creators everything they need in a one stop shop. They also have the ability to invest in and support video makers to plant a seed of content creators on their site. And they did, but half-heartedly and without sufficient follow through. It's going to take years until more than a handful of people can support themselves through youtube and even longer before we can see the sort of content that a "youtube generation" of artists is capable of creating. In the meantime such creators have to contend with google making arbitrary changes to youtube for their own petty reasons with little thought for the true potential of what they control.