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YouTube vbloggers – Taking a free ride on someone else’s dime

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“Despite the growth of YouTube’s user base, there is little evidence to suggest Google has been able to materially monetize this usage,”

 Many people are used to the idea that many things on the Internet are “free”.  It would be better to think of “free” in terms of “cost shifting”.  People who upload their videos to YouTube do it “for free” but it does cost cost someone something ( a lot )  to store and distribute those videos when “everyman” clicks on a YouTube video link.

So while vbloggers are blissfully uploading video’s and ranting on why (copyright) music is being taken out of their videos by the YouTube minders someone  is paying the bill for all this.

It’s kind of an interesting contrast.  On one hand you have the blissful idealism of vbloggers engaged in the euphoria of social media and on the other hand you have the entrepreneur and business people racking thier brain on how to pay for all this.

Google’s YouTube — the Internet’s most popular video site — could be on track to lose approximately $470 million in 2009, according to a report Friday by Credit Suisse.

The cost of bandwidth, content licensing, ad-revenue shares, hardware storage, sales and marketing and other expenses will total about $711 million, putting YouTube squarely in the red, the Credit Suisse report estimated. Bandwidth accounts for about 51% of expenses — with a run rate of $1 million per day — with content licensing accounting for 36%.

Credit Suisse projected YouTube will serve 75 billion video streams in 2009, up 38% compared with last year.

To arrive at the estimated $360 million bandwidth tab for YouTube, the analysts assumed the site will receive 375 million unique visitors in 2009 and that a maximum of 20% of those users are on the site at any given time. Credit Suisse’s analysis then assumed each user downloads a video at 400 kilobits per second, to yield a peak bit run-rate for YouTube of 30 million megabits per second.

Here are some links from the perspetive of the “other side” of blissful euphoria

YouTube bleeding cash: Is Google trapped?
http://www.wikinomics.com/blog/index.php/2009/04/23/youtube-bleeding-cash-is-google-trapped/

Do You Think Bandwidth Grows on Trees?
User-generated content may have changed the Internet, but sites like YouTube are suffocating under the costs of storing it.
http://www.slate.com/id/2216162/

YouTube May Lose $470 Million In 2009: Analysts
Credit Suisse Report Estimates Video Site Will Generate $240 Million In Revenue
http://www.multichannel.com/article/191223-YouTube_May_Lose_470_Million_In_2009_Analysts.php

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Written by frrl

May 25, 2009 at 4:05 am

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