It was a bit more than that: Google Video initially didn't allow user-generated content and when they did, the upload process was much more involved than YouTube's (largely because of fears of copyright infringement). They also had a
much better embedded video player - I first ran across YouTube because all my friends were sharing it across LiveJournal, while Google Video embeds were awkward and ugly. And their whole experience was designed to get you to click through to another video - the YouTube founders themselves said that the site took off when they added the "related videos" feature.
But even assuming that it was all because of pirated content, that's a good example of an advantage that startups have over entrenched incumbents. If you're a 6-month-old startup and you get sued for a hundred billion dollars (and lose), you just go bankrupt and try again. If you're a 10-year-old company and you get sued for a hundred billion dollars, you lose a hundred billion dollars. The risk/reward tradeoffs are dramatically different.
