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Google Losing Up To $1.65M a Day On YouTube
An anonymous reader writes "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."
Maybe this is in part because, as Al writes, "Researchers from HP Palo Alto studied videos uploaded to YouTube and found that popularity has little to do with quality or persistence."
"Researchers from HP Palo Alto studied videos uploaded to YouTube and found that popularity has little to do with quality or persistence." Let me be the first to say "I told you so."
Content Acquisition - $710,000
Revenue Sharing - $66,000
Administrative Costs - $252,000
I might be able to see the bandwidth costing a million dollars a day but could someone explain how Credit Suisse and comScore came up with these numbers?
My work here is dung.
they're making it up in volume.
First against the wall when the revolution comes
While much has been made of Google's amazing ability to make money with online advertisements, the cracks in the dike are beginning to leak.
Youtube is only the first domino in Google's house of cards. As Google increases server-side requirements to support their growing portfolio of online products, they will reach a point where advertising simply won't be profitable anymore. Youtube with its heavy server-side requirements (even running on lighttpd!) just isn't cost effective considering the number of pages they need to serve and the direct links to media they provide.
As someone who likes services that are free, I will mourn the loss of advertiser-paid services, but in terms of the viability of the web this day was inevitable.
Content Acquisition - $710,000
Revenue Sharing - $66,000
Administrative Costs - $252,000
Being the number 1 video site on the internet.... Priceless
Tibbon
tibbon.com
YouTube positions Google to try and be the next iTunes, to turn Android into the next iPhone and be the place where video and audio providers need to be to sell their content. I'm sure Google knows this and considering the economic realities of the day are looking at ways to move in on Apple. I mean really, why else would they be burning that much money folks. There has to be more of a plan when it comes to Google and media than to spend 5 billion waiting for bandwidth to become cheaper.
-- http://thegirlorthecar.com funny dating game for guys
And I think The Onion said it all.
I'm not sure exactly how. But, it is a completely different business model, and I'm not sure anyone has it figured out yet. I am grateful for the Googles of the world whoe enter these ventures without much thought to the compenssations, but I do wish them luck. I want youtube to stay around.
If you must moderate, please moderate as irrelevent, not something bad, because I'm sure someone will find this interest
I like youtuve. It pains me to think that my pleaseure is costing them.
If you must moderate, please moderate as irrelevent, not something bad, because I'm sure someone will find this interest
That's around $185 per second. That's quite a bit.
Not really. GM is losing around $540 per second if you break out the $4,200,000,000 quarterly loss they posted. Youtube's only problem is they aren't losing money fast enough to justify stealing money from the citizenry to stay afloat......
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Google has a fundamental problem: except for search ads, nothing they do makes money. Google has already dumped a few money-losing services, and they may well dump more of them. Even the few non-ad products that bring in revenue, like the Google Search Appliance and the corporate version of GMail, aren't very successful. Google stock is down 50% from the peak in 2007, and most of that decline came before the recession. Investors are getting annoyed at the money draining products.
I wouldn't be surprised if Google dumps YouTube and starts charging for GMail.
I like youtuve. It pains me to think that my pleaseure is costing them.
I can tell. Your comment here looks just like a comment on YouTube.
C'mon, are the quality and popularity statistics really that surprising when the average YouTube video is uploaded with a cheap webcam and recorded by someone who makes Paris Hilton look like Einstein?
I believe a famous dog once said "I leave more personality in tightly coiled piles on the lawn."
I see I'm not the only one who gets paid to do this.
Honestly, looking at Google's repertoire of products, most of them don't make money. Only the advertising seems to.
Which is as long as Google can stay on top as search engine king, they can fund these unprofitable pieces of software, be it Chrome, or Gears, or Docs, or whatever... but if they slip in ad revenue, or they have a couple of shitty quarters, I can see some big trouble for Google.
Say what you will about MS, but they have profit centers throughout the company, and have a hoard of cash to boot. Not a bad idea for Google to follow suit in.
The price is always right if someone else is paying.
Sweet sweet irony.
The world's burning. Moped Jesus spotted on I50. Details at 11.
No they wouldn't. Google has an estimated $15.85B cash on hand, at least as of Dec 31, 2008. (http://finance.yahoo.com/q/ks?s=Goog) At a rate of $2M a day, they have enough cash to last them more than 21 years, and that's if they don't bring in a single dollar in the meantime.
Jealously hoarding mod points since 2007.
I would just need that amount for a few days. I'm sure I could turn it all around. Just deposit that amount in my offshore bank account as my salary. If it doesn't work... you won't be out any more than usual. Why not give me a try?
[signature]
Let me relay a little dialog in which I learned the REAL revenue model of youtube. I got this mysterious call just a few days ago.
Me: Hello ... embarrassing video you posted to youtube a couple of years back? ... guess so?
Them: Mr or Ms Skull?
Me: Yes, may I help you?
Them: You remember that
Me: Um... yes?
Them: You know you gave us-- I mean, google ownership of it.
Me: I
Them: Yes. We have noticed that you have been searching for jobs lately.
Me: who is this?
Them: And we see from your email that you've been speaking with Innitech in particular.
Me: if you don't tell me-
Them: And we also see that you mapped out directions to their headquarters.
Me: I'm going to hang -
Them: If you don't want Innitech to find this video before hiring you, you will wire 1,000,000 USD to the following numbered account
I wonder if there is a connection to the massive job openings posted by Microsoft in China. The only requirement is as following: "Ability to hit refresh-button on an internet browser."
So stuff that a big huge corporation put together and protects with draconian copywrite a DMCA is only worth it? Individuals can't come up with good ideas and offer them for free?
Here are 2 examples that completely blow that out of the water:
http://www.youtube.com/user/davidspates
http://www.youtube.com/user/Peacer
And the second guy recently got a job with some major media group because of the talent he showed on youtube!
Here's another example, but it may not be to everyone's entertainment tastes but you can't dispute the quality of the actual animation is great:
http://www.youtube.com/user/MondoMedia
And here's some "big media" content actually provided without those draconian restrictions:
http://www.youtube.com/user/BritainsSoTalented
http://www.youtube.com/user/JanisDigitalMedia
The first one is the most subscribed channel on youtube. The second is content for a local radio station in philly. I find both of these sub par compared to the previous links, but hey people want to subscribe to them, and the owners must be leveraging some kind of success out of them.
So I directly challenge that the assertion that the only good stuff on youtube is the stuff taken down by DMCA. I think the only stuff you ever bothered to look for was stuff you already saw on TV.
Oh... and did you forget the Monty Python channel? If you don't think that's worth it, then I demand Taco ban your IP immediately for proclaiming such heresy!
"All great wisdom is contained in .signature files"
There is no other organization in the world that cares more about Google's expenses than Google. If Google was in fact drowning itself in expenses that it couldn't possibly recoup then it would never implemented youtube's support for high definition clips. I mean, why would they implement a feature that in the end is nothing more than implementing the exact same service while spending about 4 times the bandwidth?
Moreover, it's somewhat amusing how someone can proudly claim that someone is spending millions while at the same time confessing that it is basing his calculations on absolutely zero hard facts or figures. They don't know how much google earns from youtube, they don't even know the order of magnitude Google's bandwidth expense is in. Yet, they try to calculate things.
It starts to get really silly when their calculations, based on nothing more than whims and assumptions taken out of thin air, are presented as $1,406,720 or $1,659,945. That means that they present a result which is the fruit of pure imagination in the form of a number with 7 significant digits. I can't measure anything with that kind of exactness even if I'm holding it in my very hands. Impressive.
To sum things up, nothing to see here.
Slashdot, fix your code or at least hire someone who is competent at it to do it for you.
Google's strategy is not simply about creating or acquiring ubiquitous online services regardless of profitability. A lot of comments so far have missed the forest for the trees. You want to know why Google beats its competitors in advertising? It's not just brand presence or market domination. It's the way in which they cross-analyze data collected from ALL their services in order to increase the accuracy of their advertising.
I mean, hasn't anyone noticed this yet? Your GMail, Blogger, Calendar, Picasa, and YouTube accounts are all linked. Even the original search that Google started out with provides valuable analytics that are still trade secrets. Users of these services leave a data trail that provides Google with all kinds of information about the user's preferences. That information then gets analyzed and targeted ads are served that increase the likelihood that they'll be clicked. And that's how Google gets the business. Their biggest fear is not whether a product is losing money; it is that nobody is using it and therefore there is no data to mine. All these serivces are just carrots they dangle for the end-user. Their true customers are those who pay for the data they collect from us.
One service does not have to turn a direct profit in order to increase the value of the overall business model.
I'm not sure exactly how. But, it is a completely different set of ballistics, and I'm not sure anyone has it figured out yet. I am grateful for those of the world who are shot from a cannon without much thought to the results, but I do wish them luck. I hope they don't go splat like everyone else who's tried it.
(Also, isn't "web economics are different" a Web 1.0 statement?)
-Graham
Time is on Google's side. Look ten years down the road. Hosting costs and bandwidth costs will be greatly reduced, as is the trend. (Think how far web technology has come since 1999.) Advertising models will have matured, and YouTube will have profitable deals with specific content providers.
The most important thing to have is users. People use Google for searches because it is familiar and it is a habit. The same is now true for videos and YouTube. Despite the fact that other video sites exist, most people think of YouTube by default. Google is willing to lose money now in order to encourage this habit, so that when it does become profitable they will be in prime position.
RTFA. The 1.65M$/day figure is $2M/day in operating costs minus $0.35M/day revenues from the site (third-party estimates, so yeah, YMMV). It's not "revenue they never had," it's operating costs that are not recovered from revenues.
Are you adequate?