Digital Marketing and Social Media Strategy

Will YouTube Die?

R.I.P. YouTube could very well be the future, final blog post title on the popular video sharing site’s official blog (did you know they have a blog?). I recommend you read

  • 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.
  • not even Google can long sustain a company that’s losing close to half a billion dollars a year.
  • Advertisers don’t like paying very much to support homemade photos and videos. As a result, the economics of user-generated sites are even more crushing than those of the newspaper business.
  • YouTube sells ads on fewer than 10 percent of its videos.
  • they pay for a broadband connection capable of sending data at the equivalent of 30 million megabits-per-second—about 6 million times as fast as your home Internet connection. All this bandwidth costs Google $360 million a year, the analysts estimate.
  • YouTube spends about $250 million a year to acquire licenses to broadcast professionally produced videos.
  • the cost of running YouTube for one year exceeds $700 million.
  • the company makes only a fraction of that back in advertising—about $240 million in revenues for 2009.
  • Digital Ethnography class at the

    Dave

    http://www.davemadethat.com

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    • I won't mourn over the death of YouTube. Better video sites will emerge.

    • That's true, but will they run into the same problems?

    • I'd pay for the service that YouTube provides, even for my personal stuff.

      They could also make better use of shared bandwidth by requiring non-paying users to post content within their own hosting rather than supporting it 100% on youtube's network. If I didn't want to pay, I could still have my content show up on YouTube, but it would need to come from somewhere else. I know that this would reduce the ease of use and adoption… but they could even provide a way for users to upload content from YouTube (encoded and such) to their hosting account from within the YouTube platform. This would share the responsibility for distribution … I get 'unlimited' bandwidth from DreamHost and BlueHost…

      The one technical challenge that this would present to YouTube is that if they release this control to the users and their hosting companies, there might be a lot of content that shows up as 404 when servers can't handle the pressure of a Numa Numa (the Digg or /. effect). I would say that in these situations, YouTube would need to evaluate the value of the video itself to it's advertisers, and would need to consider hosting the video themselves to keep it up. If you can track a video with high growth, and you've got advertisers to support it… at that point it makes sense to go ahead and take on the liability for it. You can even scale your liability based on growth, and if you're smart about it, check first for the availability of the content on the user's host.. then evaluate if it's worth taking on liability for the bandwidth based on popularity / growth… then recheck the availability every so many visits to see if YouTube can push some of the liability back to the hosting provider.

      The real challenge is getting advertisers to play. I saw that America's Funniest Videos has been on the air for 16 years. 16 years of dads getting hit in the nuts, and advertisers don't seem to mind paying for bumpers with that show. TruTV and all the trash they spew still has advertisers. Why they would view YouTube any differently is beyond me.

    • YouTube doesn't die.

      Instead, it goes commercial. Just as Hulu is trying to aggregate video from NBC Universal, CBS is still doing their own thing, and Viacom is out there striking compromises with YouTube over user data – it's a cold truce at the moment, but if the dinosaurs have sense (and they do, they just hide it really well) there's going to come a “if you can't beat em, join em” moment.

      YouTube is clearly the biggest leader in the losing space. DivX failed miserably and just doesn't know its dead yet. Flickr isn't trying. Vimeo offers cooler features for the people who know how to care, but it's not nearly as widespread.

      YouTube has proven time and again that it can morph rather than die, whether it was changing from a lousy codec to h.264 to open the doors to AppleTV and iPhone/iPod Touch/iMovie, or taking on GoogleVideo and winning.

      That doesn't mean that it can't die, it can – I just don't expect it to do so in the near future.

    • These are great points and suggestions Jim. As for advertising, even if they
      are able to sell a lot of ads, at some point they will need to prove how
      successful they are. I'm curious how often people intentionally click on the
      ads. Better yet, how many people intentionally click on the ads, then make a
      purchase.

      Did you see what Vimeo did with Honday the other day? Here's a great example
      of an innovative way to advertise on video sharing sites, however, this
      would get old quickly too.

      Cheers,
      D

      Find me online: http://www.davemadethat.com
      LinkedIn: http://www.linkedin.com/in/davedelaney
      Blog: blog.davemadethat.com
      Twitter: http://www.twitter.com/davedelaney

    • Thanks Victor. It will be really interesting to see where it goes, if it
      goes. YouTube has made a big push to start carrying full shows with HD.
      These are good steps in the right direction.

      I think Hulu is a really good example of how this should be done. The
      trouble with Hulu is the dinosaurs you refer to. People just don't
      understand that unlike television, you can now buy ads during a specific
      program to reach a specific target market.

      What I mean is, if they are looking for Males 35-44, they could place an ad
      during “24”. If the advertiser is *really* smart, they could create a
      landing page on their site that speaks to the consumer and that program. So
      they could be witty and have a Keifer Sutherland look-a-like, or a imagery
      similar to the “24” countdown.

      There's a great opportunity with Hulu. Of course, this is only for the US
      market, because Hulu is blocked elsewhere. The US would make a lovely test
      market for such a study, no?

    • These are great points and suggestions Jim. As for advertising, even if they
      are able to sell a lot of ads, at some point they will need to prove how
      successful they are. I'm curious how often people intentionally click on the
      ads. Better yet, how many people intentionally click on the ads, then make a
      purchase.

      Did you see what Vimeo did with Honday the other day? Here's a great example
      of an innovative way to advertise on video sharing sites, however, this
      would get old quickly too.

      Cheers,
      D

      Find me online: http://www.davemadethat.com
      LinkedIn: http://www.linkedin.com/in/davedelaney
      Blog: blog.davemadethat.com
      Twitter: http://www.twitter.com/davedelaney

    • Thanks Victor. It will be really interesting to see where it goes, if it
      goes. YouTube has made a big push to start carrying full shows with HD.
      These are good steps in the right direction.

      I think Hulu is a really good example of how this should be done. The
      trouble with Hulu is the dinosaurs you refer to. People just don't
      understand that unlike television, you can now buy ads during a specific
      program to reach a specific target market.

      What I mean is, if they are looking for Males 35-44, they could place an ad
      during “24”. If the advertiser is *really* smart, they could create a
      landing page on their site that speaks to the consumer and that program. So
      they could be witty and have a Keifer Sutherland look-a-like, or a imagery
      similar to the “24” countdown.

      There's a great opportunity with Hulu. Of course, this is only for the US
      market, because Hulu is blocked elsewhere. The US would make a lovely test
      market for such a study, no?