Terrific Guardian column by Vic Keegan.

The creators of YouTube have done a great service in bringing video creation to the masses. But it was not because their technology was superior to others in the field (it wasn’t), but because they were in the right place at the right time when, unpredictably, YouTube suddenly attracted critical mass. This was a huge victory for garage start-ups over the likes of Google, Microsoft and Yahoo, which found to their cost that the mighty leverage arising from their big market shares in existing products buttered no parsnips in the new world of web creativity.

As a result YouTube, a company that has been mainstream for barely a year, attracted a price tag of $1.65bn, equivalent to almost $25m per employee (not that they will see much of it) or $123 for each of YouTube’s unique monthly users. The figure for those who actually generate the content would be far higher than $123 because only a small proportion of users actually put their own videos up.

Yet without those content creators, YouTube – and Flickr, and all the others – would be nothing. Imagine what would happen if eBay tried to value itself on the basis of all the inventory it held on behalf of its sellers. It wouldn’t because it knows the inventory doesn’t belong to it.

There’s something deeply comical about TechBubble 2.0 — which is what I’ve decided to call the current round of irrational exhuberance. Just to underscore how difficult it is to build and maintain a big, stable company in this febrile space, along come the reports of Yahoo’s difficulties — profits down 38%.

As far as user-generated content goes, the big question — as Vic Keegan says — is: where’s the value? The answer is that it’s in the stuff that people upload. But if people don’t like what you (the new corporate owner) start to do with the space then they can — and will — go elsewhere. Steve Ballmer implied in his BusinessWeek interview the other day, no rational company would have paid $1.65 billion for YouTube. For once, I agree with him.