Congrats to YouTube on their new riches, and congrats to Google on grabbing that prime time real estate. I am a huge fan of YouTube because almost all my searches, even for the most obscure videos, turn up results. The search for quality home grown videos is far more entertaining than the dribble programming on television. I expect that YouTube will find ways to protect and compensate owners of copywrited materials and I won’t mind watching a 15 second video here and there to help pay for the content and functionality.YouTube has succeeded where cable and satellite tv have failed to deliver. For how long have we been hearing about video on demand and the best they can offer is the ability to watch 100 different videos at any time during the day. Woo hoo. Congrats, but people clearly want far more functionality. Let me watch video clips instead of whole programs, post them, organize them ten different ways, search for them, rate them, and comment them. Google learned that shopping for Videos in a catalog/hierarchical drill down just doesn’t work, acted quickly, and made YouTube an offer they couldn’t refuse.

Google purchased a technology, a library of videos, and a huge market share. They also got an inked deal with Warner and CBS which, along with some new technology to help manage copyrighted material.

But let’s face it, YouTube will have serious competition over the next few years. Imagine when the TV networks figure out how to slice up their video content correctly. Can I go to foodtv.com, search and then watch video recipes? When will the NFL allow fans to create playlists of their favorite clips? Can I order an episode of Seinfeld whenever I want? How about letting me see the first time David Letterman had Madonna on his show?

Bottom line is, there’s still a lot of very valuable content that’s still not available (or legally available) on YouTube. And as good as their technology and user interfaces are, technologies can be repeated and improved on. So is YouTube worth $1.65B?

GoogleTube still has a lot of work to do.