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Google, Inc.'s (NASDAQ: GOOG) YouTube, the online video juggernaut that has more brand recognition than most things online or offline, could be just that -- brand recognition. It sure hasn't made Google loads of cash since the billion-dollar acquisition a few years back. Since then, YouTube has become a behemoth. Just like in Google's case with many of its products, though, it's now one of many products that is having trouble finding a revenue stream that's sustainable.Will YouTube ever find a way to make money? The specs are this for 2009: a $240 million tab in ad revenue this year, but a whopping $711 million in operating costs. Yikes. Like many internet businesses that are hot-potato topics everywhere, this one is also having trouble making money. It's the old advertising adage: once you give something away for free and then try to monetize it later with advertising, it may or may not work. Irk your customer base and they'll leave in droves. Find a model that works and you're gold.
And YouTube is not the holy grail of legit video on the web, either. Will any sponsor want to be associated with the plethora of questionable (yet entertaining) consumer content that makes up most of YouTube? That's the unanswered question still floating around in the ad industry. If Google can't monetize eyeballs for its consumer-generated content, then YouTube is going to have some serious cash issues beyond the hundreds of millions Credit Suisse predicts it will lose in 2009. If Google culls user-generated content from YouTube in an effort to go the Hulu route, will consumers just create another community? That's how YouTube was started in the first place. The market has not yet penalized Google for YouTube, as GOOG sits at over $476 today and has been spiking upward since hitting the sub-$300 mark in early March.
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Reader Comments (Page 1 of 1)
4-13-2009 @ 5:16PM
Nick said...
What market are you looking at man? Google is $376, not $476. If you can't get that fact right, I don't know about the other substance of your article ...
4-13-2009 @ 6:08PM
Ethan said...
Let users compress videos on their own computers, and maybe employ bandwidth-sharing options.
4-13-2009 @ 6:12PM
csche10420 said...
The problem is not necessarily the lack of videos but the reluctant of YouTube to mine their existing videos that have merit and value. In the health space for instance, they've done a miserable job at adding value to the user and partnering with the right people. http://tinyurl.com/dcsodb
Until they do that, they are destined to keep bleeding money
4-13-2009 @ 8:46PM
Stephen B said...
My suggestion is for You Tube and the content owners of music videos, tv shows etc start selling them. I would gladly pay a fair price for HD Quality downloads of music videos. I am an 80's junkie and watch hundreds of old music videos and even current ones and would love to have a way of purchasing them and watching them on my big screen tv. There are tons of obscure videos on YouTube that would earn a respectable amount of money in my opinion.
4-14-2009 @ 7:22PM
Jessy Scholl said...
Basically, I don't know why you would decide to trash YouTube. For Google, You Tube needs to have some major content but the problem is that Google needs to shut down Hulu.com. you heard it here first.