Re: [videoblogging] YouTube will lose half a billion dollars this year
On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). This just got Slashdotted: http://news.slashdot.org/article.pl?sid=09/04/14/1630239 They break down the numbers by viewer and day which is interesting: The average visitor to YouTube is costing Google between one and two dollars, according to new research that shows Google losing up to $1.65 million per day on the video site. More than two years after Google acquired YouTube, income from premium offers and other revenue generators don't offset YouTube's expenses of content acquisition, bandwidth, and storage. YouTube is expected to serve 75 billion video streams to 375 million unique visitors in 2009, costing Google up to $2,064,054 a day, or $753 million annualized. Revenue projections for YouTube fall between $90 million and $240 million. Jay -- http://ryanishungry.com http://jaydedman.com http://twitter.com/jaydedman 917 371 6790 [Non-text portions of this message have been removed]
Re: [videoblogging] YouTube will lose half a billion dollars this year
75 billion streams to 375 million unique visitors in 2009? Damn, they're catching up with Twittervlog. It's time I installed that new Wordpress theme. On 14-Apr-09, at 8:41 PM, Jay dedman wrote: On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). This just got Slashdotted: http://news.slashdot.org/article.pl?sid=09/04/14/1630239 They break down the numbers by viewer and day which is interesting: The average visitor to YouTube is costing Google between one and two dollars, according to new research that shows Google losing up to $1.65 million per day on the video site. More than two years after Google acquired YouTube, income from premium offers and other revenue generators don't offset YouTube's expenses of content acquisition, bandwidth, and storage. YouTube is expected to serve 75 billion video streams to 375 million unique visitors in 2009, costing Google up to $2,064,054 a day, or $753 million annualized. Revenue projections for YouTube fall between $90 million and $240 million. Jay -- http://ryanishungry.com http://jaydedman.com http://twitter.com/jaydedman 917 371 6790 [Non-text portions of this message have been removed] [Non-text portions of this message have been removed]
RE: [videoblogging] YouTube will lose half a billion dollars this year
Hi everyone: To: videoblogging@yahoogroups.com From: rup...@fatgirlinohio.org Date: Wed, 8 Apr 2009 13:48:57 -0700 Subject: [videoblogging] YouTube will lose half a billion dollars this year This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. You're forgetting one VERY important thing. Not all of us are on the Internet to make $$$. That too is an illusion. It's just like hoping to find that Mr. (Or Ms.) Right in your life. IT IS JUST NOT THAT SIMPLE. Just my $.02 worth Cheers :) Pat Cook patsbl...@live.com Denver, CO BLOGS PODCASTS AS MY WORLD TURNS - http://asmyworldturns.webs.com/ AS MY WEIGHT LOSS WORLD TURNS - http://asmyweightlossworldturns.webs.com/ THE LEFT WING CONSERVATIVE - http://www.geocities.com/theleftwingconservative/ _ Rediscover Hotmail®: Get e-mail storage that grows with you. http://windowslive.com/RediscoverHotmail?ocid=TXT_TAGLM_WL_HM_Rediscover_Storage1_042009 [Non-text portions of this message have been removed]
Re: [videoblogging] YouTube will lose half a billion dollars this year
It's still early in the game. They're rolling out new revenue models all the time. This one seems to be doing well: http://www.webpronews.com/topnews/2009/04/09/youtube-launches-click-to-buy-in-eight-new-countries Credit Suisse analysts may have to revisit their estimate that YouTube will lose $470 million this year. The site has rolled out its Click-to-Buy program - which is intended to result in quite a lot of revenue-sharing - in eight new countries. Click-to-Buy's best success storyhttp://mashable.com/2009/01/22/youtube-boost-sales/ so far has probably been that of Monty Python. After the comedy troupe launched a YouTube channel with links to Amazon, sales of one DVD boxed set soared by about 23,000 percent. Not bad for content that's a couple of decades old, right? On Wed, Apr 8, 2009 at 10:09 PM, J. Rhett Aultman wli...@weatherlight.comwrote: ads don't work with ephemeral content. Surely that's exactly where they do work? Most of the media we consume is ephemeral - TV, newspapers, online news, we see adverts alongside those things as they stream into our lives. On-demand video is largely different from that, isn't it? it's short and self- contained and chosen individually and unlike TV and news, it's not time-sensitive - it's actually less ephemeral. No; it's actually more ephemeral when you consider it from a position of total impact. The overwhelming majority of YouTube videos reach tiny numbers of viewers who consume it once. This bears no comparison to, say, TV or newspapers, which reach much larger audiences. It also bears no comparison to media where there are smaller audiences that accept repeat exposure. Such media are ripe for targeted product placement. But most YouTube videos simply don't make good raw material for an ad. The audience is small and not defined, the video will be seen once per viewer (who may not even make it the majority of the way through), the producer isn't available to exploit their relationship with the viewer to endorse things...it's basically an advertising void. But most of it - 97% apparently - is unmonetizable with advertising, because individual videos' viewing figures are too low - and maybe it's all too fragmented and uncategorizable, and perhaps advertisers are not prepared to see their adverts up against every little home video and copyright-infringing clip. Even if those things eventually collectively gather millions of views and last for a lot longer than most ephemeral advertising-funded media. Again, consider ephemeral from a standpoint of overall cultural staying power, and not just from how long something is on a screen once, and you'll see that the YouTube videos are culturally ephemeral. You actually touch on that issue in your above paragraph. According to Credit Suisse, YouTube seems to be making $50-100m from ads in videos, adjacent banners and sponsored videos. That's as good as they can do all year, and they have 40% of the total online video market worldwide, at a time when online video is booming? Right, and this is because they're monetizing wrong. Let's say that 40% of the car market, in terms of cars on the road, was GM's, and GM was found to be losing money badly. In reality, it's because GM loses $1 per car they sell because they do everything wrong. Is it valid to ask if cars as we know them will be viable? No. It's not that cars aren't viable. It's that GM is doing it wrong. Sure, online viewership is tiny compared to TV, but the gap between TV and online video advertising seems to be disproportionately large. This could have everything to do with a casual numbers game not showing the real details. Especially when you'd imagine that online video would provide greater opportunities for more targeted addressable advertising, supposedly the holy grail. Imagination isn't reality, though, and presupposition gets you nowhere. If YouTube isn't doing this sufficiently, then they're losing money. But the TV ad industry in the US alone is worth $80 billion, 60% of total advertising spend. Superbowl ads this year earned NBC over $200m - that alone is perhaps between 2 and 4 times as much as Google's making all year from YouTube video ads. Of course, it's distorting to use the SuperBowl in a good comparison here, because it's well known that the SuperBowl is basically tulip season for advertisers. People spend on those ads because they exist. It's similar to how city after city hosts an Olympic Games but never profits on the venture. That said, I understand where you're trying to go with this, but you keep treating this as a problem with online video when, in fact, it's a problem with YouTube. Your assumption is that, if YouTube can't do it, nobody can. That itself only makes sense if you can prove that the only people capable of doing it are YouTube and what supporting engineers Google gives them. Is
Re: [videoblogging] YouTube will lose half a billion dollars this year
Yeah, you make a good case. I can't really argue back any more than just to say that I was - probably naively - basing my impressions on an assumption that Google knows what it's doing as far as advertising is concerned, being impressed by their $20+bn/yr ad revenues. I'd never really considered that Google would be GM-like in their handling of an important property like YouTube: handling it incompetently, not understanding the potential online video advertising market, not seeing the real opportunities, not giving YouTube the resources they need. I had assumed that they're trying their absolute hardest not to lose half a billion dollars and that they haven't been able to make it work yet. But perhaps you're right and they are indeed shackled by a GM-like existing situation with YouTube and don't know how to fix it. And you're also right that I hadn't considered that YouTube would just end because it doesn't work - as the third most popular website, and something that Google paid $1.7bn for, I didn't see that coming about any time soon. But with these kind of losses, maybe it will. Unless they can find another way to fund all that bandwidth from those tiny amounts of viewers that advertisers aren't interested in - bandwidth that they're already paying well below market rate for. I wasn't talking about Micropayment systems for direct payment, though - I was talking about the kind of dollar payments that people pay for media in places like the iTunes store. And I see that you're saying it's just a problem with YouTube, not with online video, and that some of the best and most ready-to- monetize content isn't on YouTube. I don't know what that content is, and I'd assumed that the vast majority of the most monetizable commercial online video is published on YouTube as well as wherever else it might go, just to capture the audiences. So I didn't really understand the difference between the most monetizable online video and YouTube. But you're probably right, there are probably lots of other options that I hadn't considered which mean that advertising in online video will suddenly become very successful and ubiquitous and pay per view won't become the dominant model for funding it all as I'd suggested. And maybe, to follow on from Jay's post about Time Warner as ISP and content creator, there are all sorts of other ways that we will end up paying for all this data that we've hitherto thought of as free. Rupert http://twittervlog.tv On 8-Apr-09, at 6:09 PM, J. Rhett Aultman wrote: ads don't work with ephemeral content. Surely that's exactly where they do work? Most of the media we consume is ephemeral - TV, newspapers, online news, we see adverts alongside those things as they stream into our lives. On-demand video is largely different from that, isn't it? it's short and self- contained and chosen individually and unlike TV and news, it's not time-sensitive - it's actually less ephemeral. No; it's actually more ephemeral when you consider it from a position of total impact. The overwhelming majority of YouTube videos reach tiny numbers of viewers who consume it once. This bears no comparison to, say, TV or newspapers, which reach much larger audiences. It also bears no comparison to media where there are smaller audiences that accept repeat exposure. Such media are ripe for targeted product placement. But most YouTube videos simply don't make good raw material for an ad. The audience is small and not defined, the video will be seen once per viewer (who may not even make it the majority of the way through), the producer isn't available to exploit their relationship with the viewer to endorse things...it's basically an advertising void. But most of it - 97% apparently - is unmonetizable with advertising, because individual videos' viewing figures are too low - and maybe it's all too fragmented and uncategorizable, and perhaps advertisers are not prepared to see their adverts up against every little home video and copyright-infringing clip. Even if those things eventually collectively gather millions of views and last for a lot longer than most ephemeral advertising-funded media. Again, consider ephemeral from a standpoint of overall cultural staying power, and not just from how long something is on a screen once, and you'll see that the YouTube videos are culturally ephemeral. You actually touch on that issue in your above paragraph. According to Credit Suisse, YouTube seems to be making $50-100m from ads in videos, adjacent banners and sponsored videos. That's as good as they can do all year, and they have 40% of the total online video market worldwide, at a time when online video is booming? Right, and this is because they're monetizing wrong. Let's say that 40% of the car market, in terms of cars on the road, was GM's, and GM was found to be losing
Re: [videoblogging] YouTube will lose half a billion dollars this year
I had assumed that they're trying their absolute hardest not to lose half a billion dollars and that they haven't been able to make it work yet. But perhaps you're right and they are indeed shackled by a GM-like existing situation with YouTube and don't know how to fix it. First off, having worked at Google, I know for a fact they're willing to let a project bleed a little while they figure out what to do. It can be as simple as their current model was an attempt that didn't work. I'm not trying to call them GM so much as to just say that Google is not the end all of online video. And you're also right that I hadn't considered that YouTube would just end because it doesn't work - as the third most popular website, and something that Google paid $1.7bn for, I didn't see that coming about any time soon. But with these kind of losses, maybe it will. Unless they can find another way to fund all that bandwidth from those tiny amounts of viewers that advertisers aren't interested in - bandwidth that they're already paying well below market rate for. Well, I definitely think that Google would seriously lose face if they didn't find a way to keep YouTube. They will not do that unless they have to. However, online video exists beyond YouTube and I'd argue it's the stuff beyond YouTube that's got the best chance at making real money. Others on here have noted some very simple ideas like a YouTube Business site...nobody is doing this, and they need to. I wasn't talking about Micropayment systems for direct payment, though - I was talking about the kind of dollar payments that people pay for media in places like the iTunes store. Yes, but as Clay Shirky points out, iTunes doesn't work because it competes in the marketplace. It succeeds because it stays separate from a free market in online media. Furthermore, the popularity of online video right now is in its ability to be linked, embedded, and discussed. If we were to micropay for videos, then I'd be paying money for following links. I'll stop following them or I'll join groups to circumvent that wall. This already happened with online text for the New York Times. That model went over poorly for them, and all you had to do was sign up for a lousy account. I don't know what that content is, and I'd assumed that the vast majority of the most monetizable commercial online video is published on YouTube as well as wherever else it might go, just to capture the audiences. So I didn't really understand the difference between the most monetizable online video and YouTube. IMHO, The Escapist (http://www.escapistmag.com) has one of the best online video systems going. Zero Punctuation and Unskippable are hits, they have plenty of internal ads which likely pay somewhat well, and they drive their own merchandise sales. But you're probably right, there are probably lots of other options that I hadn't considered which mean that advertising in online video will suddenly become very successful and ubiquitous and pay per view won't become the dominant model for funding it all as I'd suggested. It's worth remembering that advertising works in TV and print because television shows and popular publications are *co-created* with the advertising. That is, the content is designed to work well with advertisers, and the advertisements are tuned to work well with the content. You just can't do this in the YouTube model. At a place like The Escapist (or even a person's non-YouTube video blog), you can. -- Rhett http://www.weatherlight.com
Re: [videoblogging] YouTube will lose half a billion dollars this year
Great. But if you look at the YouTube videos, the links are in the info panel, not in banners or overlays, so I don't know whether it's really a proper display of the effectiveness of annoying Click To Buy text overlays popping up over someone's home video containing a Britney Spears song. Also, I love 'sales of one DVD box set soared by 23,000 percent'. Classic marketing use of statistics to blur meaning, being (dead) parroted by Mashable from YouTube's blog. Especially with no reference to how many sold before, or over what period this was. If they sold one copy per week of the box set before the channel launched, it'd mean the next week they sold 230. If they sold 100 a day before the channel, it'd mean they sold 230,000 copies the next day. Big difference. On 9-Apr-09, at 9:22 AM, Adam Quirk wrote: It's still early in the game. They're rolling out new revenue models all the time. This one seems to be doing well: http://www.webpronews.com/topnews/2009/04/09/youtube-launches-click-to-buy-in-eight-new-countries Credit Suisse analysts may have to revisit their estimate that YouTube will lose $470 million this year. The site has rolled out its Click-to-Buy program - which is intended to result in quite a lot of revenue- sharing - in eight new countries. Click-to-Buy's best success storyhttp://mashable.com/2009/01/22/youtube-boost-sales/ so far has probably been that of Monty Python. After the comedy troupe launched a YouTube channel with links to Amazon, sales of one DVD boxed set soared by about 23,000 percent. Not bad for content that's a couple of decades old, right? On Wed, Apr 8, 2009 at 10:09 PM, J. Rhett Aultman wli...@weatherlight.comwrote: ads don't work with ephemeral content. Surely that's exactly where they do work? Most of the media we consume is ephemeral - TV, newspapers, online news, we see adverts alongside those things as they stream into our lives. On-demand video is largely different from that, isn't it? it's short and self- contained and chosen individually and unlike TV and news, it's not time-sensitive - it's actually less ephemeral. No; it's actually more ephemeral when you consider it from a position of total impact. The overwhelming majority of YouTube videos reach tiny numbers of viewers who consume it once. This bears no comparison to, say, TV or newspapers, which reach much larger audiences. It also bears no comparison to media where there are smaller audiences that accept repeat exposure. Such media are ripe for targeted product placement. But most YouTube videos simply don't make good raw material for an ad. The audience is small and not defined, the video will be seen once per viewer (who may not even make it the majority of the way through), the producer isn't available to exploit their relationship with the viewer to endorse things...it's basically an advertising void. But most of it - 97% apparently - is unmonetizable with advertising, because individual videos' viewing figures are too low - and maybe it's all too fragmented and uncategorizable, and perhaps advertisers are not prepared to see their adverts up against every little home video and copyright-infringing clip. Even if those things eventually collectively gather millions of views and last for a lot longer than most ephemeral advertising-funded media. Again, consider ephemeral from a standpoint of overall cultural staying power, and not just from how long something is on a screen once, and you'll see that the YouTube videos are culturally ephemeral. You actually touch on that issue in your above paragraph. According to Credit Suisse, YouTube seems to be making $50-100m from ads in videos, adjacent banners and sponsored videos. That's as good as they can do all year, and they have 40% of the total online video market worldwide, at a time when online video is booming? Right, and this is because they're monetizing wrong. Let's say that 40% of the car market, in terms of cars on the road, was GM's, and GM was found to be losing money badly. In reality, it's because GM loses $1 per car they sell because they do everything wrong. Is it valid to ask if cars as we know them will be viable? No. It's not that cars aren't viable. It's that GM is doing it wrong. Sure, online viewership is tiny compared to TV, but the gap between TV and online video advertising seems to be disproportionately large. This could have everything to do with a casual numbers game not showing the real details. Especially when you'd imagine that online video would provide greater opportunities for more targeted addressable advertising, supposedly the holy grail. Imagination isn't reality, though, and presupposition gets you nowhere. If YouTube isn't doing this
[videoblogging] YouTube will lose half a billion dollars this year
This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. http://tinyurl.com/c2akgl *YouTube set to lose $470M; most ad spots going unsold* According to a Credit Suisse analyst, the most popular video Web site — owned by the richest Web site Google — will lose $470 million this year because it sells advertising only on a fraction of its pages. For a site that generates as much online traffic as YouTube, it would seem a no-brainer that profit is streaming in. But according to a Credit Suisse analyst, the most popular video Web site — owned by the richest Web site Google — will lose $470 million this year because it sells advertising only on a fraction of its pages. YouTube sells ads on less than 3 percent of the Web pages that could carry commercial messages, analyst Spencer Wang wrote Friday in a note to clients. To boost that percentage, Google needs to standardize ad formats and better demonstrate that ads on YouTube help sell products, he wrote. Weakness at YouTube led Wang to cut his 2009 profit estimate for Google to $4.68 a share from $4.83, according to the report. Google stock has fallen more than a third from its 52-week high last May, hurt by slowing growth in the online-ad market and by the decline in the broader stock market. Despite the growth of YouTube's user base, there is little evidence to suggest Google has been able to materially monetize this usage, Wang wrote. In light of the current ad recession, experimental budgets are being trimmed. YouTube's sales will rise about 20 percent to $240.9 million this year, Wang estimated. The company may spend $360.4 million for bandwidth to distribute its video, and $252.9 million to pay content owners for the rights to show their material, he wrote. Yahoo! Groups Links * To visit your group on the web, go to: http://groups.yahoo.com/group/videoblogging/ * Your email settings: Individual Email | Traditional * To change settings online go to: http://groups.yahoo.com/group/videoblogging/join (Yahoo! ID required) * To change settings via email: mailto:videoblogging-dig...@yahoogroups.com mailto:videoblogging-fullfeatu...@yahoogroups.com * To unsubscribe from this group, send an email to: videoblogging-unsubscr...@yahoogroups.com * Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
Re: [videoblogging] YouTube will lose half a billion dollars this year
in other news... http://blog.streamingmedia.com/the_business_of_online_vi/2009/04/disney-says-hulu-running-out-of-cash.html ;) On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. http://tinyurl.com/c2akgl *YouTube set to lose $470M; most ad spots going unsold* According to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. For a site that generates as much online traffic as YouTube, it would seem a no-brainer that profit is streaming in. But according to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. YouTube sells ads on less than 3 percent of the Web pages that could carry commercial messages, analyst Spencer Wang wrote Friday in a note to clients. To boost that percentage, Google needs to standardize ad formats and better demonstrate that ads on YouTube help sell products, he wrote. Weakness at YouTube led Wang to cut his 2009 profit estimate for Google to $4.68 a share from $4.83, according to the report. Google stock has fallen more than a third from its 52-week high last May, hurt by slowing growth in the online-ad market and by the decline in the broader stock market. Despite the growth of YouTube's user base, there is little evidence to suggest Google has been able to materially monetize this usage, Wang wrote. In light of the current ad recession, experimental budgets are being trimmed. YouTube's sales will rise about 20 percent to $240.9 million this year, Wang estimated. The company may spend $360.4 million for bandwidth to distribute its video, and $252.9 million to pay content owners for the rights to show their material, he wrote. Yahoo! Groups Links [Non-text portions of this message have been removed] Yahoo! Groups Links * To visit your group on the web, go to: http://groups.yahoo.com/group/videoblogging/ * Your email settings: Individual Email | Traditional * To change settings online go to: http://groups.yahoo.com/group/videoblogging/join (Yahoo! ID required) * To change settings via email: mailto:videoblogging-dig...@yahoogroups.com mailto:videoblogging-fullfeatu...@yahoogroups.com * To unsubscribe from this group, send an email to: videoblogging-unsubscr...@yahoogroups.com * Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
Re: [videoblogging] YouTube will lose half a billion dollars this year
Rereading my post, my final comments were supposed to be questions, not statements. Here are some more: As a layman, I don't understand how people will make money with advertising on online video. Surely at some point soon, pay per view will become the norm? Will the recession bring this on? With things like paypal and google checkout, isn't paying for things much easier now? Easy enough to make it worth the viewer's while doing it? And will that lead to a lot more long-form content, so people feel they're getting their money's worth? On 8-Apr-09, at 3:40 PM, Michael Sullivan wrote: in other news... http://blog.streamingmedia.com/the_business_of_online_vi/2009/04/disney-says-hulu-running-out-of-cash.html ;) On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. http://tinyurl.com/c2akgl *YouTube set to lose $470M; most ad spots going unsold* According to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. For a site that generates as much online traffic as YouTube, it would seem a no-brainer that profit is streaming in. But according to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. YouTube sells ads on less than 3 percent of the Web pages that could carry commercial messages, analyst Spencer Wang wrote Friday in a note to clients. To boost that percentage, Google needs to standardize ad formats and better demonstrate that ads on YouTube help sell products, he wrote. Weakness at YouTube led Wang to cut his 2009 profit estimate for Google to $4.68 a share from $4.83, according to the report. Google stock has fallen more than a third from its 52-week high last May, hurt by slowing growth in the online-ad market and by the decline in the broader stock market. Despite the growth of YouTube's user base, there is little evidence to suggest Google has been able to materially monetize this usage, Wang wrote. In light of the current ad recession, experimental budgets are being trimmed. YouTube's sales will rise about 20 percent to $240.9 million this year, Wang estimated. The company may spend $360.4 million for bandwidth to distribute its video, and $252.9 million to pay content owners for the rights to show their material, he wrote. Yahoo! Groups Links [Non-text portions of this message have been removed] Yahoo! Groups Links
Re: [videoblogging] YouTube will lose half a billion dollars this year
Yes, YouTube is losing money, but just because an analyst says they are losing half a billion dollars doesn't make it so. Sent from my iPhone
Re: [videoblogging] YouTube will lose half a billion dollars this year
True, but from my brief experience of working with Analysts, they do spend quite a lot of time working on their figures, not just plucking things out of thin air. And it's not a two-bit Analyst, it's a couple of guys at Credit Suisse. So I'd presume that they were basing this on something to make it worth reporting such dramatic figures. A bit more detail here: http://www.contentinople.com/author.asp?section_id=450doc_id=174797 Although YouTube makes up approximately 41 percent of all videos viewed in the U.S., the site's ability to monetize its library of videos content remains a challenge. The analysts estimate that YouTube will bring in about $240 million in revenue in 2009, which will come mostly from homepage placement ads and in-video overlays and adjacencies. Credit Suisse estimates that YouTube generates approximately $86.7 million a year on homepage placement ads, or about $7 million per month. In-video ads and banner adjancencies contribute another $87 million, according to the analyst estimates. Sponsored videos ($37.1 million) and sponsored links ($30.1 million) also contribute to YouTube's revenues. On the cost side, Credit Suisse estimates that Google spends $711 million in operating expenses related to YouTube. Those costs include bandwidth, content acquisition, partner revenue shares, site overhead, and storage. The biggest expense for YouTube is the incredible amount of bandwidth that it must pay for. Despite estimating that YouTube pays about half the lowest market rate for bandwidth, the cost of streaming 5 million videos a month adds up. Analysts place bandwidth costs associated with YouTube at about $360 million a year, or $1 million a day. As YouTube ramps up the amount of premium content it serves, content acquisition is also becoming a serious cost for the site, with Credit Suisse estimating that YouTube will pay approximately $260 million in content acquisition costs in 2009. YouTube's revenue share deals contribute an additional $49 million, according to Credit Suisse estimates, while general overhead -- sales and marketing, RD, and GA expenses -- are expected to set the company back about $24 million in 2009. Finally, the cost of storage for Google's content library, estimated at about 150 million to 160 million videos for a total of 5 petabytes, is estimated at $12.7 million a year. ... On 8-Apr-09, at 3:51 PM, Steve Rhodes wrote: Yes, YouTube is losing money, but just because an analyst says they are losing half a billion dollars doesn't make it so. Sent from my iPhone [Non-text portions of this message have been removed]
Re: [videoblogging] YouTube will lose half a billion dollars this year
I think you're painting online video with an incredibly wide brush here, and it's pretty distortionary. These questions were once asked about text online, too, and the answer is that any of a number of business models have arisen. Content that has been worth money and isn't value-added through linking, such as books and academic journals, has successfully followed system of paying for titles/editions/subscriptions. Some text is most value-added when it can be linked...like news. That's followed some flavor of ad-supported. The overwhelming majority of text on the web is not seen as worth buying and/or is so ephemeral that its only value is in being linked to for a short period of time. It's remained free, in the sense that its authors tend to absorb costs for keeping it online. Video will be the same way. If YouTube is losing money, it doesn't mean that the advertising model is dead. What it means is something already known-- ads don't work with ephemeral content. -- Rhett. http://www.weatherlight.com Rereading my post, my final comments were supposed to be questions, not statements. Here are some more: As a layman, I don't understand how people will make money with advertising on online video. Surely at some point soon, pay per view will become the norm? Will the recession bring this on? With things like paypal and google checkout, isn't paying for things much easier now? Easy enough to make it worth the viewer's while doing it? And will that lead to a lot more long-form content, so people feel they're getting their money's worth? On 8-Apr-09, at 3:40 PM, Michael Sullivan wrote: in other news... http://blog.streamingmedia.com/the_business_of_online_vi/2009/04/disney-says-hulu-running-out-of-cash.html ;) On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. http://tinyurl.com/c2akgl *YouTube set to lose $470M; most ad spots going unsold* According to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. For a site that generates as much online traffic as YouTube, it would seem a no-brainer that profit is streaming in. But according to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. YouTube sells ads on less than 3 percent of the Web pages that could carry commercial messages, analyst Spencer Wang wrote Friday in a note to clients. To boost that percentage, Google needs to standardize ad formats and better demonstrate that ads on YouTube help sell products, he wrote. Weakness at YouTube led Wang to cut his 2009 profit estimate for Google to $4.68 a share from $4.83, according to the report. Google stock has fallen more than a third from its 52-week high last May, hurt by slowing growth in the online-ad market and by the decline in the broader stock market. Despite the growth of YouTube's user base, there is little evidence to suggest Google has been able to materially monetize this usage, Wang wrote. In light of the current ad recession, experimental budgets are being trimmed. YouTube's sales will rise about 20 percent to $240.9 million this year, Wang estimated. The company may spend $360.4 million for bandwidth to distribute its video, and $252.9 million to pay content owners for the rights to show their material, he wrote. Yahoo! Groups Links [Non-text portions of this message have been removed] Yahoo! Groups Links Yahoo! Groups Links
Re: [videoblogging] YouTube will lose half a billion dollars this year
As a layman, I don't understand how people will make money with advertising on online video. Surely at some point soon, pay per view will become the norm? Will the recession bring this on? With things like paypal and google checkout, isn't paying for things much easier now? Easy enough to make it worth the viewer's while doing it? And will that lead to a lot more long-form content, so people feel they're getting their money's worth? Let's look at a parallel issue: http://www.consumeraffairs.com/news04/2009/04/tw_meters_expansion.html According to Time Warner Cable, customers will be charged from $29.95 to $54.90 a month, depending on how fast their connection is and how much bandwith they use. Subscribers who go over their cap would be charged $1 per gigabyte (GB) used. Time Warner Cable will offer cap packages of 5, 10, 20, and 40 GB for users in the test markets. Consumer advocates and telecommunications analysts say the real goal of metered broadband is not to prevent bandwith consumption, but to protect the profits from cable television, which faces challenges from the many services enabling video and TV watching over the Internet. In the US, Time/Warner is a content producer (HBO/CNN, etc)...cable TV provider...and broadband provider. They are realizing that younger people are canceling their TV subscriptions...and just downloading the videos they want to watch. So two of their three business models are failing. I know for me this is true. I stopped paying for cable years ago. I just watch what I want online. This is like the phenomenon of young people canceling their land phone lines and just using their cell phones. So I wonder what this means to the conversation that Rupert pointed out. If YouTube/Hulu are struggling to cover licensing and bandwidth costs, and Time/Warner is charging for bandwidth usage...how will these issues intersect? Jay -- http://ryanishungry.com http://jaydedman.com http://twitter.com/jaydedman 917 371 6790 [Non-text portions of this message have been removed]
Re: [videoblogging] YouTube will lose half a billion dollars this year
That's me - broad brush man. Jack of all trades, master of none. I take your point, that it's horses for courses, but I still don't understand the long term future of advertising for on-demand video. It's just not happening on anything like the scale of traditional advertising, or even other online advertising. Surely it's different from text - not least in advertisers' ability to keep track of what content they're being connected to and the costs of providing it? And I don't understand ads don't work with ephemeral content. Surely that's exactly where they do work? Most of the media we consume is ephemeral - TV, newspapers, online news, we see adverts alongside those things as they stream into our lives. On-demand video is largely different from that, isn't it? it's short and self- contained and chosen individually and unlike TV and news, it's not time-sensitive - it's actually less ephemeral. But most of it - 97% apparently - is unmonetizable with advertising, because individual videos' viewing figures are too low - and maybe it's all too fragmented and uncategorizable, and perhaps advertisers are not prepared to see their adverts up against every little home video and copyright-infringing clip. Even if those things eventually collectively gather millions of views and last for a lot longer than most ephemeral advertising-funded media. According to Credit Suisse, YouTube seems to be making $50-100m from ads in videos, adjacent banners and sponsored videos. That's as good as they can do all year, and they have 40% of the total online video market worldwide, at a time when online video is booming? Sure, online viewership is tiny compared to TV, but the gap between TV and online video advertising seems to be disproportionately large. Especially when you'd imagine that online video would provide greater opportunities for more targeted addressable advertising, supposedly the holy grail. But the TV ad industry in the US alone is worth $80 billion, 60% of total advertising spend. Superbowl ads this year earned NBC over $200m - that alone is perhaps between 2 and 4 times as much as Google's making all year from YouTube video ads. Is online video really that unattractive to advertisers? How is that going to change? It seems to me that at the moment, short on-demand online videos are more attractive to the viewers than the advertisers, and therefore that viewers are likely to pay more for them directly than advertisers would. At the moment, they don't have to make the choice, because 40% of the market is being subsidized by Google at a cost of $500m. No other business could sustain that kind of loss. That's what I mean about it distorting the market. And if that subsidy disappeared tomorrow, surely something would have to pay for the huge costs of bandwidth and content in delivering all this video to people? Will that be advertising? Or pay per view? Judging by the stats so far, my money would be on pay per view, not advertising. But again, that's just a broad personal impression from very little knowledge or experience. I am just a layman. Rupert On 8-Apr-09, at 4:30 PM, J. Rhett Aultman wrote: I think you're painting online video with an incredibly wide brush here, and it's pretty distortionary. These questions were once asked about text online, too, and the answer is that any of a number of business models have arisen. Content that has been worth money and isn't value-added through linking, such as books and academic journals, has successfully followed system of paying for titles/editions/subscriptions. Some text is most value-added when it can be linked...like news. That's followed some flavor of ad-supported. The overwhelming majority of text on the web is not seen as worth buying and/or is so ephemeral that its only value is in being linked to for a short period of time. It's remained free, in the sense that its authors tend to absorb costs for keeping it online. Video will be the same way. If YouTube is losing money, it doesn't mean that the advertising model is dead. What it means is something already known-- ads don't work with ephemeral content. -- Rhett. http://www.weatherlight.com [Non-text portions of this message have been removed]
Re: [videoblogging] YouTube will lose half a billion dollars this year
I wrote about this last June. I don't understand why they are so hesitant to open it up to the business/marketing community for $$$. My entire post lays it out. http://www.jimkukral.com/how-youtube-is-missing-out-on-12-billion-a-year-by-not-having-a-business-channel/ I figure they can make 1.2 Billion a year if they did. And if you're worried about the marketing content ruining the mainstream videos. Wall it off into its own zone. Anyway, I think it's stupid of them to not do this. They have some grand master plan, and that plan might be to fail. Jim Kukral 2220 Superior Viaduct, Suite 3 Cleveland, OH 44113 j...@jimkukral.com http://www.jimkukral.com http://www.connectwithjim.com (schedule an appointment with me) http://www.twitter.com/jimkukral (follow my every thought!) http://www.TheBizWebCoach.com (coaching consulting) http://www.BlendthisBook.com (i'm writing a book) On Wed, Apr 8, 2009 at 4:48 PM, Rupert rup...@fatgirlinohio.org wrote: This is from the Seattle Times last week. Credit Suisse analyst says YouTube will cost Google $470m. Bandwidth costs them $360m, content rights cost them $252m, but sales from advertising are only $240m (um, only). Oops. If YouTube and Google can't make it work, how the hell is anybody else supposed to? Google is actually hurting the whole online video market by providing video as a free 'loss leader'? While they can afford to prop up YouTube's failed business model by subsidizing their massive losses to the tune of half a billion a year, how can anybody else innovate sensible revenue models for online video? The Free internet is a massive illusion. http://tinyurl.com/c2akgl *YouTube set to lose $470M; most ad spots going unsold* According to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. For a site that generates as much online traffic as YouTube, it would seem a no-brainer that profit is streaming in. But according to a Credit Suisse analyst, the most popular video Web site owned by the richest Web site Google will lose $470 million this year because it sells advertising only on a fraction of its pages. YouTube sells ads on less than 3 percent of the Web pages that could carry commercial messages, analyst Spencer Wang wrote Friday in a note to clients. To boost that percentage, Google needs to standardize ad formats and better demonstrate that ads on YouTube help sell products, he wrote. Weakness at YouTube led Wang to cut his 2009 profit estimate for Google to $4.68 a share from $4.83, according to the report. Google stock has fallen more than a third from its 52-week high last May, hurt by slowing growth in the online-ad market and by the decline in the broader stock market. Despite the growth of YouTube's user base, there is little evidence to suggest Google has been able to materially monetize this usage, Wang wrote. In light of the current ad recession, experimental budgets are being trimmed. YouTube's sales will rise about 20 percent to $240.9 million this year, Wang estimated. The company may spend $360.4 million for bandwidth to distribute its video, and $252.9 million to pay content owners for the rights to show their material, he wrote. Yahoo! Groups Links [Non-text portions of this message have been removed] Yahoo! Groups Links * To visit your group on the web, go to: http://groups.yahoo.com/group/videoblogging/ * Your email settings: Individual Email | Traditional * To change settings online go to: http://groups.yahoo.com/group/videoblogging/join (Yahoo! ID required) * To change settings via email: mailto:videoblogging-dig...@yahoogroups.com mailto:videoblogging-fullfeatu...@yahoogroups.com * To unsubscribe from this group, send an email to: videoblogging-unsubscr...@yahoogroups.com * Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
Re: [videoblogging] YouTube will lose half a billion dollars this year
ads don't work with ephemeral content. Surely that's exactly where they do work? Most of the media we consume is ephemeral - TV, newspapers, online news, we see adverts alongside those things as they stream into our lives. On-demand video is largely different from that, isn't it? it's short and self- contained and chosen individually and unlike TV and news, it's not time-sensitive - it's actually less ephemeral. No; it's actually more ephemeral when you consider it from a position of total impact. The overwhelming majority of YouTube videos reach tiny numbers of viewers who consume it once. This bears no comparison to, say, TV or newspapers, which reach much larger audiences. It also bears no comparison to media where there are smaller audiences that accept repeat exposure. Such media are ripe for targeted product placement. But most YouTube videos simply don't make good raw material for an ad. The audience is small and not defined, the video will be seen once per viewer (who may not even make it the majority of the way through), the producer isn't available to exploit their relationship with the viewer to endorse things...it's basically an advertising void. But most of it - 97% apparently - is unmonetizable with advertising, because individual videos' viewing figures are too low - and maybe it's all too fragmented and uncategorizable, and perhaps advertisers are not prepared to see their adverts up against every little home video and copyright-infringing clip. Even if those things eventually collectively gather millions of views and last for a lot longer than most ephemeral advertising-funded media. Again, consider ephemeral from a standpoint of overall cultural staying power, and not just from how long something is on a screen once, and you'll see that the YouTube videos are culturally ephemeral. You actually touch on that issue in your above paragraph. According to Credit Suisse, YouTube seems to be making $50-100m from ads in videos, adjacent banners and sponsored videos. That's as good as they can do all year, and they have 40% of the total online video market worldwide, at a time when online video is booming? Right, and this is because they're monetizing wrong. Let's say that 40% of the car market, in terms of cars on the road, was GM's, and GM was found to be losing money badly. In reality, it's because GM loses $1 per car they sell because they do everything wrong. Is it valid to ask if cars as we know them will be viable? No. It's not that cars aren't viable. It's that GM is doing it wrong. Sure, online viewership is tiny compared to TV, but the gap between TV and online video advertising seems to be disproportionately large. This could have everything to do with a casual numbers game not showing the real details. Especially when you'd imagine that online video would provide greater opportunities for more targeted addressable advertising, supposedly the holy grail. Imagination isn't reality, though, and presupposition gets you nowhere. If YouTube isn't doing this sufficiently, then they're losing money. But the TV ad industry in the US alone is worth $80 billion, 60% of total advertising spend. Superbowl ads this year earned NBC over $200m - that alone is perhaps between 2 and 4 times as much as Google's making all year from YouTube video ads. Of course, it's distorting to use the SuperBowl in a good comparison here, because it's well known that the SuperBowl is basically tulip season for advertisers. People spend on those ads because they exist. It's similar to how city after city hosts an Olympic Games but never profits on the venture. That said, I understand where you're trying to go with this, but you keep treating this as a problem with online video when, in fact, it's a problem with YouTube. Your assumption is that, if YouTube can't do it, nobody can. That itself only makes sense if you can prove that the only people capable of doing it are YouTube and what supporting engineers Google gives them. Is online video really that unattractive to advertisers? How is that going to change? It seems to me that at the moment, short on-demand online videos are more attractive to the viewers than the advertisers, and therefore that viewers are likely to pay more for them directly than advertisers would. Again, it's not about online video. It's about different classes of video requiring different monetization processes. A huge class of online video, which I'd estimate as the overwhelming majority of YouTube videos, is completely worthless at making money. As for why micropayments won't work, I'll defer that to Clay Shirky, who said it far better than I ever could: http://www.shirky.com/writings/fame_vs_fortune.html At the moment, they don't have to make the choice, because 40% of the market is being subsidized by Google at a cost of $500m. No other business could sustain that kind of loss. That's what I mean about it
