Income from premium offers and other revenue generating programs don’t offset YouTube expenses of content acquisition, bandwidth, storage, and other costs, calculations show
It must have seemed a smart idea when Google paid $1.65 billion for YouTube in 2006. But more than two years later, Google is losing as much as $1.65 million a day on the Web’s most popular video site, according to calculations and analysis from Internet Evolution.
You can read the full report here:
“The average visitor to YouTube costs Google between one and two dollars,” said Internet Evolution Editor in Chief Terry Sweeney, citing the estimated $513 million to $663 million in annual YouTube losses divided by its 375 million unique visitors. The report, written by David Silversmith, drew from a variety of sources, including Bear Stearns, comScore, Credit Suisse, and Google itself.
“Google is, in effect, paying YouTube consumers to visit the site, despite premium offers and other revenue-generating programs that can’t keep pace with the site’s expenses — content acquisition, bandwidth, and storage, to name a few,” Sweeney said. How long Google expects to continue subsidizing the site or when it expects to break even is less clear. YouTube refused comment on the problem.
Google’s plans to serve up advertising on YouTube have had limited success. YouTube sells homepage roadblock ads that cost $175,000 per day and branded channels at $200,000 apiece; neither has been widely deployed, according to the Internet Evolution report. Google AdWords image advertising remains the primary revenue source for YouTube.
About Internet Evolution
Internet Evolution (www.internetevolution.com) hosts more than 140 world-famous Internet experts — such as Kevin Mitnick, once the most-wanted computer hacker in the world; Dr. Lawrence Roberts, inventor of packet switching, and one of the world’s foremost authorities on telecom network architectures; Vint Cerf, Vice President and Chief Internet Evangelist for Google; and Craig Newmark, the founder of Craigslist.com — all of whom are addressing today’s critical socio-economic issues within its ThinkerNet blogosphere. In March 2009, Internet Evolution won three prestigious Min’s Best-of-Web awards, including Digital Team of the Year, Best Community/Social Networking Site, and Best B2B Magazine-Branded Video.