Google Losing (Massive Amounts of) Money in Youtube

Google may be losing up to $1.65M a Day on YouTube–this is according to an article by David Silversmith in his blog at Internet Evolution.

He bases his assessment from research provided by financial firm Credit Suisse and Internet measurement provider comScore Inc. According to their estimates, Youtube is on track to serve 75 billion video streams to 375 million unique visitors in 2009. From this amount of users and traffic, it is estimated they earn only anywhere from a low of $90 million (Bear Stearns) to a high of $240 million (Credit Suisse). Revenues come from adwords and home page banner advertising, and premium dedicated channel content.

To earn this however, they spend an estimated $753 million annually on bandwidth and infrastructure. So, depending on whose version of
revenues you accept, Google is losing anywhere from $513 million to
$663 million annually on YouTube, or anywhere from $1.4 million to as
much as $1.65 million every day (see chart below).

Internet Evolution – David Silversmith – Google Losing up to $1.65M a Day on YouTube

You can read more of David’s post here, or read a post from Technologizer, which expects Youtube to radically shift its strategy and content to survive.

Now if Youtube is having a hard time monetizing its massive user base and traffic–what does this bode for the site’s smaller competitors such as Veoh, Brightcove, and others? Or for that matter sites that offer free services such as Twitter. What does this say about the viability of businesses whose business model is around free and user-generated content?


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