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:[email protected] mailto:[email protected] <*> To unsubscribe from this group, send an email to: [email protected] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
