Originally Posted by Libertine

Yeah, YouTube probably was a bad example.

I'd say things like Megarotic, Rapidshare, etc. are pretty good examples of the business model apparently working, however. There are tons of sites following their business model.

The limiting factor here are bandwidth costs vs advertising revenues, though. In the long run, bandwidth prices are going to go down, simply because things like HD content require loads of fairly cheap bandwidth.

At some point, it's going to become viable to add the costs of large amounts of (probably non-exclusive) content to the bandwidth costs. In fact, it might already be viable. Either way, when that moment comes, most paysites (except those offering very unique content) are going to get hit hard.

Think of it this way: In the beginning, conversions were great. Then came TGPs. Those had lower conversions, but got lots of visitors. Then came MGPs. Lower conversions again, but these too were willing to sacrifice margins for volume.

What I'm describing is simply the next step in that process: it will decrease margins, but will make up for that with volume. That volume it will get, of course, by taking traffic from the traditional sites.