Google Losing Up To $1.65M a Day On YouTube
 

From the Slashdot site:

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."

Source: http://news.slashdot.org/article.pl?.../04/14/1630239

I wonder when we are going to start seeing more and more Tube sites closing simply because they are not profitable. If Google can't make this business model profitable, nobody can.

:2 cents:

If they charged people $5 a month they would make a killing

interesting...

If thy charged $5/month quite a lot of people wouldn't use that site.

that's true but most people would pay it or have their parents pay it, if you're the kid who's not paying $5/month for youtube you're not cool

YouTube is part of Google's data mining project. While it may seem that YouTube is losing money, it is part of a bigger plan. To create extremely detailed user profiles of our habits and preferences. This data collection is done to serve us very targetted advertisements, whereever we are. To say it in another way; Google wants to know what we are thinking - and make profit from that.

does anyone here understand the concept of extended roi?

trust me, google is not failing at the tube business..

google owns the market by a long shot and will continue to implement new ways to monetize the eyeballs..

also, google may not need to ever have youtube profitable if the cdb is made up in other avenues like data mining, etc...

i'd say that estimate is way off, google will have killer deals on the bandwidth

Information on you is worth more than you think, and it's worth making it a loss leader, when you can make it back somewhere else, which i'm sure they do.

what data do they collect that is worth spending hundreds of millions of dollars per year? Youtube asks for very little PII - An email address & a user ID. So they can target ads to me based on my video tastes. Big deal. Those ads are not testing well, & they haven't been able to adequately monetize the traffic stream. These are high IQ people over at google, smarter than microsoft. & they can't make money off youtube.

the only way youtube would make money is ads pre-roll, but it could their user base down significantly

Consider that youtube videos have the effect of causing people to search
for more info. Guess where they search?

Big Mike's Pub is losing money on the free peanuts and popcorn?
NOT!!
People just get more thirsty.

I don't know why youtube dont work on post roll adverts. Before the video starts.

its comical how everyone desperately wants to believe that somehow allowing free streaming video online is going to fail... or that google is even trying to profit with youtube.com directly.

Good point, I suppose when it's google, it all counts

But then again, the people who can't afford to pay $5 per month won't be missed... :winkwink:

YouTube is an absurdity & its day of reckoning is inevitable.

you can't run a website that lets all the people in the world upload unlimited video, then hotlink the video to all kinds of media, giving away all this free bandwidth, & somehow money is going to be made on this. everything is free! Free is a great traffic generator, but its not really free when the traffic can't pay the bills.

They'll make it all back when Coca-Cola and P&G start skinning YouTube for $100mil/month - for them it'll equal the boost in the world wide brand name recognition that is worth billions through other types of media.

yup that is very true.. look at myspace, they skin that all the time. I'm sure they get a pretty penny to skin myspace or like you said youtube

I agree. You'd think these analysts should have some pretty accurate information though. However I did see Mark Cuban basing his calculations off bandwidth at 12 cents a GB :S So who knows. I doubt Google would allow it to loose that much money, but could be wrong.

They'll soon have users hosting their own vids in some kind of torrent-like way

Some youtube content producers are already putting ads in the middle of their content ("indy mogul" for example), and there's already embedded advertising at the bottom of most videos.

The idea that they are losing that much money totaling ignores the primary
benefit GOOG gets from youtube right now - market share. They could probably
sell the youtube.com name alone for 2 billion dollars. Just as "google"
has become a verb that people use every day, saying "google it before asking here",
they are making youtube THE site for video. Remember the search engine wars?
Back in the 1990s companies spent hundreds of millions to get and keep a
peice of the search engine pie. All of the other SEs are pretty much gone.
Now that Google IS search, they are monetizing the hell out of out, but first
they had to firmly establish their ownership of the search game. I'm sure now
that the word "YouTube" is used by news anchors to mean "the internet", the
very bright guys and gals at goog have monetization plans that will kick in real
soon.

I read this yesterday about Youtube and why it is DOOMED. Check it out. Grim.

They are about to unveil a deal with some movie studios... I wonder if it will stop the bloodletting...

there are intangibles for google running youtube.

:1orglaugh:1orglaugh

Market share and domination yes. Google searches account for 80% of online searches. The figure is 90% in the UK.

firrealz

makes you wonder why anyone bothers SEOing on the other engines :pimp

Didn't profit reports announced today show that Google's revenue declined. They showed an increase in profits because of cost cutting.

Everyone has so much faith in Google like they are secretly cooking up a master plan with all these ventures that don't make money. Truth is, they don't have a plan. They haven't innovated with ONE SINGLE PRODUCT. If they had a history of innovation, I would believe, but they don't.

Even with Youtube, they bought it, than sat around while hulu.com became the source for legit premium television and movie content. Now, several years later they just starting to announce (not do, announce) deals with big media company. Yep, Google sure is on the cutting edge...lol.

I do not think $750mil/year is the correct estimation of their costs of running youtube - that's just way too much. Most likely it falls within $100-200mil/year range and their loss on that is $100mil/year max, most likely less - and that's much easier to swallow than $500mil/year loss. At that price than can afford to just hang around for the next decade to see if something profitable will maybe pop out of it.

anyone else notice that they ignored the entire revenue stream that comes from promoting your videos via keywords.


http://www.google.com/support/youtub...60&ctx=sibling

count the number of videos that don't have a featured list of videos beside it.
good luck finding any, and if you clicked on any of those videos google just got paid.

No they wouldn't... why don't you figure out how much $5/mo per person would make then annually and come back and try again. :1orglaugh

Google isn't putting any ads up fearing lawsuits... tube sites have ads all over.

this is youtube.com not tranza.com don't forget :1orglaugh

tubes tubes tubes

Youtube could help google optimize their PPC advertisements to show more relevant results on other sites than their own since they could profile users better.
As example a surfer could search for "travel europe" on google and google would return regular results + PPC advertisement.
If google could fetch "data" at the same time from youtube showing "drunk partyclips" they could return better results focusing on places like Prague/Bulgaria and nightlife while if there is a newly added "given birth to my 3rd child" video in their youtube account they might get better revenues from returning results based on family friendly resorts at the beach.
Increased revenues from such things could not directly be contributed to youtube, it just add more value to their bottom line

It'll be interesting to see if Hulu joins YouTube at the top soon. They're closing in on US rank at least, 35 and rapidly increasing to YouTube's 4...I predict especially with the heavy advertising they've started to do, they'll be top 10 in the US by the end of the year. It seems like they already have the money making down pat too.

It is doomed in it's current form. I seriously doubt they will keep it in its current form though. But they have been very slow to make changes so who knows.

Yeah, Hulu actually has more revenue than Youtube as well, at least according to analysts reports for 2008 so they know how to do something right.

So Google had all that brand recognition and traffic and Hulu jumped in, signed deals, and is making more than them. Just goes to prove what I've been saying that Google is not innovating nor is it making any smart moves. The whole data mining argument is just nonsense. If google could make more money, they would do it. They're not sitting back and losing money on purpose so they can execute some brilliant plan in the future. If that was the case they wouldn't have hired a specialist to cut costs like crazy these past several months just so they could turn a profit this quarter.

But they are several years late in making deals with movie and TV networks. They were the first big tube site and already they are playing catch up before they even turned a profit. Someone should be fired if you ask me.

Well they were riding on the wave of copyrighted content, and now record companies and media corps are making them take a lot of it off the moment it hits. I tried uploading a song only (i.e. no accompanying music video) to YT, a pretty unknown song, but it was apparently under copyright and the record company got it off YT immediately and I know for sure it wasn't ALWAYS like that. There's absolutely no reason for them to work with YT when YT owes nearly 100% of their clout to those companies...the only reason there's nearly the amount of people there to watch amateur videos there is because they were already there watching clips of shows, music videos, news clips, etc. So those people will slowly but surely migrate to Hulu as the word gets out more. The interesting thing is that Hulu even works with 3rd party sites if it has to - like I think every South Park video on Hulu actually redirects to the video on SouthParkStudios.com.

it is comical... it is failing...

that's the point... sites evolve and youtube as ya know it will too...

YouTube heard us talking: http://finance.yahoo.com/news/YouTub...&asset=&ccode=

I giggle.
:1orglaugh

Or go to another free tube, if you're the kid who's mommy is paying $5/month for youtube you're the village idiot :)

Luckily for Google they can afford it, but it is wonderful to watch all the people here who think giving a product away is the right thing to do. :1orglaugh

This says it all.

Except it could of said "When the traffic doesn't pay the bills.

killing killing...

if they updated thier equipment and bandwidth becomes speedier then the numbers whould fall..

Meaning thier super duper hard drives could be upgraded and the bandwidth loosened.. makeing the nesisary need of bandwidth and storage way easier and im sure they will do this. or will when they cant function any more.