by Thomas Walters

Created on: March 03, 2010

YouTube is the hugely popular video sharing service, serving over 1 billion page views a day. Like so many other websites, despite what Google may tell you, its aim is to make money. At the moment it isn’t doing so and is only surviving because of the huge company that is Google. At the moment YouTube packs in a massive amount of ad space on the site - on the homepage, int he sidebar next to results, next to videos and in some cases in the videos themselves. And although this may be annoying at times, when you consider the true cost of running a site like YouTube, you may start to understand why they are so very prevalent in the site’s design. According to Google annual financial report, lat year YouTube accounted for less than 1% of the company’s revenue, that is, less than $200 million, and seeing as how they spend $40 million on bandwidth costs alone, it isn’t making all that much money at the moment. And it’s not hard to see why - 24 hours of video is uploaded to YouTube every minute, and although most of this content will be disregarded to be viewed only maybe 100 times, some videos (usually the viral ones) can accumulate over 165 million video - and that’s a heck of a lot of bandwidth!

So why is YouTube still in business? Well like I said, thanks to Google and their massive data centers across the world, they are able to sustain the site. They know that it has huge, money-making potential and they want in on it. But if Google is to reap the rewards they are going to have to drastically change YouTube’s revenue model. Although we know that advertising is goldmine, at this point in time it can’t support YouTube, so Google is going to have to think up new ways to get advertisers to pay them.

I believe the next step forward in the evolution of YouTube is the distribution of content from huge entertainment networks for a fee. By this I mean I believe the huge broadcasters of the world will pay Google to host episodes and whole series’ on the site. This is really a win win situation. Because the infrastructure required to sustain a video streaming site is rather expensive, and while I don’t doubt that broadcasters could easily invest in such an endeavor, I believe that it would be far more financially viable to make a deal with YouTube. This has already started with some broadcasters - Channel 4 from the UK has a library of videos on YouTube with premium content at the helm. As do some other, smaller

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