teh ghey

http://www.slate.com/id/2216162/

Do You Think Bandwidth Grows on Trees? User-generated content may have changed the Internet, but sites like YouTube are suffocating under the costs of storing it.

Everyone knows that print newspapers are our generation's horse-and-buggy; in the most wired cities, they've been pummeled by competition from the Web. But it might surprise you to learn that one of the largest and most-celebrated new-media ventures is burning through cash at a rate that makes newspapers look like wise investments.

It's called YouTube: According a recent report by analysts at the financial-services company Credit Suisse, Google will lose $470 million on the video-sharing site this year alone. To put it another way, the Boston Globe, which is on track to lose $85 million in 2009, is five times more profitable?or, rather, less unprofitable?than YouTube. All so you can watch this helium-voiced oddball whenever you want.

YouTube's troubles are surprisingly similar to those faced by newspapers. Just like your local daily, the company is struggling to sell enough in advertising to cover the enormous costs of storing and distributing its content.

Newspapers have to pay to publish and deliver dead trees; YouTube has to pay for a gargantuan Internet connection to send videos to your computer and the millions of others who are demanding the most recent Dramatic Chipmunk mash-up. Google doesn't break out YouTube's profits and losses on its earnings statements, and of course it's possible that Credit Suisse's estimates are off.

But if the analysts are at all close, YouTube, which Google bought in 2006, is in big trouble. As Benjamin Wayne, the CEO of the rival video-streaming company Fliqz, pointed out in a recent article for Silicon Alley Insider, not even Google can long sustain a company that's losing close to half a billion dollars a year.

But YouTube's problems point to a larger difficulty for many Web startups: "User-generated content" is proving to be a financial albatross. Two years ago, Time magazine named "you" its Person of the Year for doing your small part in fueling the Web 2.0 revolution. The magazine argued that by collecting and distributing the creations of millions of individuals, the Web is upending the way we learn about what's going on in the world around us.

There's no doubt this is true; you experienced the presidential inauguration through millions of pictures captured by ordinary people, and a lot of what you learn these days comes from articles put together by the anonymous hordes who power Wikipedia. Yet even though they've changed the way we live, sites that collect and share content produced by all of us haven't done the one thing many tech evangelists said they'd do?make a ton of money. Or, in many cases, any money...

teh ghey

and that's just in 2009
http://www.multichannel.com/article/...9_Analysts.php

mynameisjim

In a few minutes the business experts on GFY will explain to all of us how acquiring an asset for $2 billion that loses $.5 billion a year is simply a "write off" for Google, or a "loss leader" or some other term they don't fully understand the meaning of. Not to mention the data gleemed from youtube searches is worth far more than the $4 billion they've lost.

In fact, weeks go by when Youtube is not even mentioned during Google board meetings and all the execs laugh how they "almost" forgot about Youtube until someone brought it up because they make so much money, they could care less.

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bobby666

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Dirty F

Yes we know, it's posted 5 times already.