Google Video was also better technically in basically every way— the audio/video sync was better (I preferred it for posting short swing dancing clips), encoding was faster, and seeking and mid-video permalinks were better. Plus, I believe GV had a live streaming feature first.
YouTube still won, largely for the social/commenting/vlogging features, which is part of why it was such a big deal when YouTube users became the basis of Google+ (with its real name policy).
YouTube both won and lost, because it was a startup operating in the legal grey zone. It was long before most content was commercial content, commercials, music videos or other professional content most often clips or full videos of content people did not own copyright for. Sure, many people want to share their amateur content on the island with the most inhabitants. Neither Google other rivals or other startups had the gumption and survivor instinct to play this hand. If Google was the host or already owned YouTube when the DRM issues emerged and were being negotiated the copyright owners would have come after Google even harder, faster and more expensively. I say YouTube lost, because they needed to sell. When Google bought YouTube the business model and risks were better known. Months after Google purchased YouTube Viacom famously sued. By that point publishers were seeing benefits along with the costs.
That's interesting. It never occurred to me whether they were technically better. I always preferred YouTube to Google Video, just from the perspective of someone watching videos - because of the UI/UX of the site and player (didn't use any of the social features).
YouTube still won, largely for the social/commenting/vlogging features, which is part of why it was such a big deal when YouTube users became the basis of Google+ (with its real name policy).