Friday, May 1, 2009

Youtube Costs Google.

Stumbled across this article by David Silversmith this morning, which makes interesting reading in the year of the economic downturn.

I looked at the list of leaks that David lists -- and wondered twofold:

How many of those 375 vistors actually look at the content? -- You see sites like Facebook and LiveJournal have the ability to embed Youtube content, so people find a video they like, embed it and every subsequent pageview sends a request to YT to begin streaming the content (in order to show the thumbnail image).

Now, Facebook has the News Feed, as well as the Highlights, as well as Sponsored Clips -- more than once a day, these contain (for me, anyway -- with 100 or so friends) at least one YT link, 99% of which, i'll never actually play, but every one of them actually generate an HTTP request anyway.

Is Youtube simply Google's Loss Leader? -- Google does many other things which are less bandwidth and resource intensive than Youtube, such as Blogger, GMail, Google Scholar, Google Checkout and to a lesser extent, Google Earth to name a few, all of which have the same advertising strategy (Adwords) that Youtube has, at similar pricing scales, it strikes me that Google may take a bath on Youtube in order to draw people in to making a Google Account, thereby gaining access to their other resources and presenting Google with many, many more advertising opportunities they would not otherwise have had.

A thought along similar lines, was "Would Youtube have been this popular if Google hadn't acquired it? -- Reading David's piece further, he talks about Content Acquisition costing money, which is true -- but i'd suggest an ever growing amount of content that Google sends to viewers will be commercial over the course of the next 12-24 months, as the economic downturn bites over and over and causes people to cancel luxury items like subscription television, possibly turning to Youtube to pick up highlights of events as they happen instead.

Google has also done a lot for Youtube that i doubt they could have done on their own -- everything from striking deals for the content, to providing the bandwidth and storage space to sustain the "1 second attention span" internet generation, to adding features like the "High Definition" button to the site itself.

"With Popularity Comes Expense" is a phrase I came up with nearly 15 years ago to define the ability of the "modern" internet to actually exist -- at the time I was working in the pioneering phase of Internet Advertising, back before web based video and when only the technically elite and businesses with vast IT budgets had pages at all.

Nice to see it still rings true today.

How does Google stop the bleeding?

My guess is, it doesn't have to.