We're three years and some $8 billion into the Web boom, and the story to date is a bit unsettling: The runaway leader in the space, YouTube, is a money pit even though it accounts for well over 50% of the market. Its competitors continue to raise money and struggle for scale and ad dollars.

Time to panic? No, says Canaan Partners' Warren Lee, who led the VC firm's investments in Tremor Media, Motionbox and Associated Content, after previously leading video investments for Comcast Interactive Capital. Lee explained to us why he believes the Web video market is pretty much right where it should be, and why he doesn't think we're looking at a bursting bubble. Next year, though...

Silicon Alley Insider: Does it bother you that no one seems to be making money from Web video?
Warren Lee: Companies shouldn't be focused on profitability. If a year from now now there aren't a lot of profitable companies, then there are serious questions about this category. Today it's still early. This is the time where smart startups are establishing their positions in the marketplace as oppo Read the full article