YouTube is neither a failure nor doomed, and Google's goal with it isn't (mainly) direct income or data collection.
What they want is to build broad, lasting customer loyalty. To be omnipresent in consumer's online lives.
A single search engine can easily be replaced by another one. Remember AltaVista?
But if a person has a google account which is linked to his email address, his youtube account, his blogger account, his orkut account, his feedburner account, etc., he can't just leave Google.
http://en.wikipedia.org/wiki/List_of_Google_products
Google wants to be a part of virtually aspect of your online life. They don't create the content, they create the framework in which you can create, consume and search the content. This is a long-term plan, not a short-term one. Google are very aware of the fact that missing the "next big thing" could well mean losing market share across the board.
Imagine for a moment that YouTube had been acquired by Microsoft instead of Google. YouTube accounts would have been integrated with Windows Live accounts, thereby further increasing the market share of Hotmail and Messenger. It would also have boosted MSN.com (possibly through far-reaching intregration of the two) and Live Search. Essentially, Google's online market share would have been broadly compromised, and with it its stronghold in online advertising.