Pull out the plug, turn off the lights
June 23, 2006 11:18 AM   Subscribe

A million dollars a month in bandwidth costs; 200 TB of data moved daily. How long can YouTube survive?

Like many of us, I've come to love YouTube, but with no visible revenue model (that I'm aware of) besides Google ads, how much longer is it sustainable? I ask this because I found myself wondering the other day how much I would pay, annually, to continue having access to YouTube should it go pay for use. The answer? Despite how much I enjoy the site, and how useful I have found it, even twenty bucks a year seemed a bit much to continue to have free rein to watch videos that I could probably, with a little more effort, find elsewhere. Perhaps I'm alone in this-- but perhaps not. So: will YouTube collapse under its own weight, having burned through its venture capital, another internet disaster story? Or do they have something up their collective sleeves which might turn the site into a viable resource, so that we can enjoy the Piano Stripper and Numa Numa and another million lip-synced home videos for years to come?
posted by jokeefe to Computers & Internet (19 answers total)
 
Twelve million dollars a month? I figure if they play their cards right, they could get that in advertising revenue.

Can we compare Youtube with a network channel? How many viewers of YouTube are there? Millions? Sounds like a pretty good advertising base to me.

I doubt if they would go to a pay-model. A more in-your-face advertising scheme is likelier...
posted by storybored at 11:35 AM on June 23, 2006


Don't they have some deal with an MTV show (VH1? some other station altogether?) called Daily Download or something, where that show plays youtube clips? (Vague, I know, but maybe someone else knows more details...)
posted by inigo2 at 11:35 AM on June 23, 2006


Until the copyright lawyers come down on it. $1mil operating costs a month aren't large. Consider it took something along the lines of $205million for the Superman Returns movie. That's 17 years of YouTube. The longer it lasts the more people will use it to share videos with friends, meaning more ad revenue generated from Google Ads.

Besides per minute operating costs are only 1/10-1/2 a cent. Surely they can garner 2 cents a minute from various advertisers, that's a fairly hefty profit.
posted by geoff. at 11:38 AM on June 23, 2006


I can see YouTube asting 15-second ads in front of each video just like they do on CNN and Yahoo and AtomFilms and other such sites. And I can see them making a pretty decent profit doing so.
posted by solid-one-love at 11:43 AM on June 23, 2006


Oops. "asting" = pasting
posted by solid-one-love at 11:43 AM on June 23, 2006


They're working on video advertising right now. They'll be fine, revenue-wise. What they really should be worried about is that their success is napster-style - built on copyright violations.
posted by YoungAmerican at 11:54 AM on June 23, 2006


What they really should be worried about is that their success is napster-style - built on copyright violations.

Yup, can't stress that enough.
posted by SeizeTheDay at 12:29 PM on June 23, 2006


Shouldn't this be in the blue?
posted by Steven C. Den Beste at 12:33 PM on June 23, 2006


It's a question looking for an answer. The Blue's not meant to be (officially) a polling/Q & A site (even though it often ends up that way).
posted by SeizeTheDay at 12:35 PM on June 23, 2006


What they really should be worried about is that their success is napster-style - built on copyright violations

The sound and video quality is probably low enough to not represent much of a threat to sales of video or audio products, yet it allows consumers to sample freely things like music videos. It should be a win - win for the media companies, but they are probably to set in their ways to understand that.
posted by caddis at 12:37 PM on June 23, 2006


$1mil operating costs a month aren't large.


That's $1 mill in bandwidth costs, operating costs would be greater.
posted by bitdamaged at 12:51 PM on June 23, 2006


I don't know how much google ads are making them, but I doubt it's $1mil/month.

However, I imagine they'd probably start injecting short video commercials in front of videos either at random or for all of them, like CNN does.
posted by twiggy at 1:44 PM on June 23, 2006


"The sound and video quality is probably low enough to not represent much of a threat to sales of video or audio products, yet it allows consumers to sample freely things like music videos. It should be a win - win for the media companies, but they are probably to set in their ways to understand that."

that is 100% true. Totally. The problem is that your typical media exec just shits him/herself and starts crying about lost sales/etc. I used to find plenty of low-quality crap on Napster back in the day too.

I love youtube. It's great for finding old obscure videos. I wish that copyrights were shorter so stuff (like old TV ads) could live on forever.
posted by drstein at 3:03 PM on June 23, 2006


YouTube also has a video-hosting service which makes it very easy for anyone to have in-page video on their website. Do they charge for that? I don't think they do, but they could definitely charge for that. It's a web-publishing task that's beyond even fairly advanced users -- transcoding, embedding etc -- plus the bandwidth problems. People would definitely pay for that.
posted by AmbroseChapel at 5:07 PM on June 23, 2006


To me, the entire value of youtube is that when you find something interesting you can pass along the link to your mates and they can laugh at it too. If it became the case that you needed a subscription to view videos that would kill the entire usefulness of the site, even if I was willing to pay it, the inability for my friends to see a link I sent them would make it useless.

So, they will probably just slowly start adding more ads everywhere, in the page and in the video. I don't see a subscription model in their future, unless it's something where the uploader pays.
posted by Rhomboid at 6:52 PM on June 23, 2006


I wish that copyrights were shorter so stuff (like old TV ads) could live on forever.
Amen, but with a caveat: Copyrights are not the only problem with old TV ads. Trademarks live forever. I'm sure that trademarks aren't supposed to prevent distribution of any video ads, but if some company didn't like what was going on and there was any possible maneuvering for a lawsuit... yecch. It would also prevent any derivative works from being generated, which kinda stinks.
posted by brianvan at 7:34 PM on June 23, 2006


Each $1 they spend on bandwidth buys them only a little more than 6 GB of transfer, eh? That seems high, considering I can obtain the same deal. You'd think they'd be able to negotiate a much better deal than me on bandwidth, considering how muc of it they use.
posted by evariste at 9:30 PM on June 23, 2006


The thing that keeps YouTube in business is the same thing that fueled all the dotcoms in the 90's. It's the fact that people who invest in internet companies are complete morons.

The day that YouTube starts putting mandatory ads infront of their clips is the day that everyone moves over to Google Video. Google doesn't need ads, they can afford the bandwith costs.
posted by sideshow at 2:00 PM on June 26, 2006


A little late to the game, here's an article in the San Jose Mercury News about Youtube's advertising.
posted by sarahnade at 8:41 AM on July 12, 2006


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