Google losing up to $1.65 Million a Day on YouTube

From Slashdot: (Read the article here.)

“The average visitor to YouTube is costing Google between one and two dollars, according to new research that  shows Google losing up to $1.65 million per day on the video site.

More than two years after Google acquired YouTube, income from premium offers and other revenue generators don’t offset YouTube’s expenses of content acquisition, bandwidth, and storage.

YouTube is expected to serve 75 billion video streams to 375 million unique visitors in 2009, costing Google up to $2,064,054 a day, or $753 million annualized. Revenue projections for YouTube fall between $90 million and $240 million.

Maybe this is in part because, as  Al writes,“Researchers from HP Palo Alto studied videos uploaded to YouTube and found that  popularity has little to do with quality or persistence.”


This is why you will probably see changes happening to YouTube that we mentioned earlier. – Marina


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76 Responses to Google losing up to $1.65 Million a Day on YouTube

  1. leoNard says:

    HEY Marina.. Miss HotForWords–could you give your fans and followers an up-DATE?

    Gates are open permitting——-{{{MOSQUITOS}}}

    … :roll: When you get paid are you liable with the lost? :lol: pharm/farmed…maybe do a show on {TAXES} and hiding behind a corporation :P common comment

    YouTube signs Sony, redesigns site for professional content
    April 16, 2009 1:56 PM PDT by Greg Sandoval

    “The Internet’s largest video site on Thursday announced that it has struck deals with a host of entertainment companies”

    “…they have redesign part of its Web site to create separate areas for professionally made content.”

    “At this point, it appears the most significant partnership is with Sony Pictures…”


  3. matsrg says:

    I am wondering there all the money is coming from? How can they loose so much at all?
    Why dont spend some money on some project management things instead :grin:
    But of couse as long some money goes to hotforwords it is ok :lol:


  4. mittfh says:

    It wouldn’t surprise me…

    The UK branch of YouTube is currently at loggerheads with the Performing Rights Society – our main copyright clearing house. YouTube’s POV is that they’re asking for an unaffordable amount of money to renew their contract.
    The PRS’s POV is that the fee should reflect the increased usage of YouTube since the last contract was negotiated, and the amount YouTube is willing to pay would result in “substantial” losses of income to the artists they represent.

    In the meantime, YouTube has imposed a UK-wide ban on almost every video published by a record label (or has a “Contains content by [record label]” tag).


    As for advertising, I’m slightly sceptical of the proposed new layout. It seems as though media companies will be able to use the Film / Music / TV tabs, but everyone else (including Partners like yourself) will sit in the general Videos tab.

    And as for advertising mechanisms, why don’t they start rolling out AdWords – initially to premium users (like media companies) where they can guarantee the content, then start filtering it down through to Partners.

    Perhaps one way to harvest data for the advertising would be the video title, description, tags and highly rated comments (say +4/+5 – to weed out spam and “I like this” / “Me too!” style comments).

  5. James says:

    Comscore?? thats a tracking cookie website!! ha! they got data from tracking cookies? ! HA!

  6. James says:

    I have 2 things to say here.

    1 does this mean YT will so not exist?

    2 But how much money does google make as google to compensate?

  7. Bob says:

    How long can they keep going at that rate before they go down the (You)tubes?
    That’s why several of us have urged you to diversify, because at the moment you have all your eggs in one basket and, if they go down, you’ll get dragged down with them.

  8. logischabbaubar says:

    The numbers published by Credit Suisse are simply rough estimates. Nobody knows how much Youtube has to pay to intellectual property rights owners because Google usually doesn’t disclose that. I’m always sceptical when analysts make precise statements like these because in many cases they’re just guessing like you and me.

    But it is obvious that Youtube is making huge losses. There are no ads on more than 90 % of Youtube’s webpages. Most of Youtube doesn’t create any revenues, but the servers and the traffic still have to be paid for.

    This is not an exclusive Youtube problem. All so-called social networks are affected. Due to their success, both Facebook and Twitter have tremendous tech costs, but they don’t have revenues. Recently Facebook took out a loan of $ 100 million just to be able to pay its operative costs. Twitter recently raised $ 35 million in venture capital. In the long run, both investors and creditors are expecting that the money they are giving to Facebook and Twitter will pay off – both Facebook and Twitter will have to make profits some day or they will face bancruptcy. But neither Facebook nor Twitter seem to have a business model yet. This won’t go on forever. There will be either a lot of changes coming to Facebook and Twitter, or Facebook and Twitter will be terminated.

    Contrary to Facebook and Twitter, Youtube has the advantage that they have a strong mother company behind them that can bear the losses for some time. Google purchased Youtube in 2006. But Google is a private stock holder owned company whose shareholders want to see profits as well. The Google management has already been asked questions on a shareholder meeting in mid-2008 about the monetization of Youtube. Google co-founder Sergey Brin replied that making Youtube profitable was one of Google’s top priority.

    My conclusion is that many of the annoying things that we’ve seen on Youtube in the past few months (the Popular board, new page designs, blocking music videos in several countries etc.) are the results of Google’s efforts to increase Youtube’s revenues and reduce its costs and that this is just the beginning.

    Youtube may be the dominating video platform on the internet. But this simply does not matter to investors at all. In the wonderful world of capitalism, investors want to see money coming in. On the long run, nearly all social networks will have to redesign their services in order to make them profitable. Investors may be willing to bear some losses at the beginning, but they won’t be willing to throw money into a black hole forever.

    • Hey logischabbaubar, nicely said.

      I have a question for you or anyone.

      OK, we know that individuals like Marina, sxephil, Buckey, LisaNova and many others are YouTube partners who share in the Ad revenue for Ads placed next to the videos of those partners.

      Now, what about the big corporations who have YouTube accounts and are uploading videos like Associated Press, Sony, etc, etc. Are they partners too and do they get paid like the little guy?

      These large corporations are already commercial enterprises by definition, where the small YouTubers are not. Do the large corporations pay YouTube or are they getting a free ride and getting paid off of Ad revenue?

      What if we all paid YouTube on a sliding scale based on income, which, if the math could be made to work out in such a way that the disadvantaged would pay zero, and the large corporations pay less than if they were to pay for an advertising campaign. Maybe there is a win-win algorithm that can be devised.

      • logischabbaubar says:

        Hi pedanticKarl ;-)

        I don’t know the details of the contracts that Youtube has made with the big companies. As far as I can see, many of these companies have their videos been placed in the “Promoted” box so I think that these contracts are different from those that Youtube has made with partners like Marina, Michael Buckley or VenetianPrincess. By the way, what’s happened to the “Promoted” box anyway? I can’t see it anymore.

        In the forum, some of us were speculating that Google could transform Youtube into some sort of Themtube in order to compete the Hulu challenge. By now, I can’t see that this is going to happen. A few days ago, Youtube and Universal Music Group have agreed to launch a new video service called vivothat will include “premium content” from UMG. Youtube will do the technical operation, Google will sell the ads and Youtube and UMG will share the revenues. If that’s the way that Google is going in order to make money with its video platform, then I think that’s really good news for Youtubers. vivo will generate profits for Youtube that can compensate some of the losses that Youtube makes on and will still be

        Oh, I’ve got something to add for Marina: I don’t think that you need to fear the big media companies. They may have huge ressources of skilled designers, video editors, style advisors and staff that manages their correspondence. But there’s one thing that they don’t have: they don’t have new media skills like you. You have managed to build a community around you. In the past two years you have earned a lot of new media skills that old media companies don’t have.

        Just compare Marina’s videos with the clips from her latest O’Reilly appearances. Fox news tried to add some graphical gimmicks like toe ones that Marina is using in her videos. Marina’s gimmicks are smoother, funnier and fresher. Marina knows how to interact with her community, old media people don’t because they are unable to understand that a community is something different from a group of passive customers.

        I don’t know what plans Google has for Youtube, but it’s obvious that a lot of changes will come to Youtube. Some of these things may be annoying. There may be days when again nothing will work properly because Youtube will be reorganizing their server infrastructure in order to save tech costs or because of further growth.

        Whatever change may come, I’m not expecting that things will go against Marina for one simple reason: Marina doesn’t contribute to Youtube’s losses. She has one of the few channels where Youtube can place ads and generate revenues. That’s what they’re needing right now.

      • greatestpotential says:

        Perhaps YouTube is like a mom and pop shop and Google is like the son they never thought they’d have who comes in from time to time to get camping supplies yet I think it has to do with net neutrality, broadband access, and service providers more than anything else.

      • greatestpotential says:

        Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days… Fundamentally, net neutrality is about equal access to the Internet. In our view, the broadband carriers should not be permitted to use their market power to discriminate against competing applications or content. Just as telephone companies are not permitted to tell consumers who they can call or what they can say, broadband carriers should not be allowed to use their market power to control activity online.

        —Guide to Net Neutrality for Google Users

    • Hello logischabbaubar, thank you for your answers. :grin:

      Regarding the “Promoted” box; it looks like YT has made a few changes in that area. I read about it on their blog a while back.

      Here is how to see promoted videos. On YouTube, in the search box, enter some keyword where you would like to see a video about that interest. Let’s say that you are interested in cameras; enter ‘camera’. Then, on the “search results” page, look off to your right. You’ll see several videos and it will say “Promoted Videos”. You can click one of the Promoted Videos links and it will get you to this page regarding how to promote your video.

      By the way, recently someone on this HFW site said, and I forgot who it was, that the media companies would not be getting into short form (or was it under 10 min) videos. It looks like short form ABC and ESPN may be taking lessons from Marina. :grin:

      By the way, has anyone ever blogged or made comments comparing the “New Media” personalities like Marina to historical accounts where the little guy has led the way in innovation and eventually a fight ensues between “David and Goliath”. I was thinking of blogging about it, but I’m too busy with other more Important :wink: projects.

      In the past we’ve had amateur radio folks leading the way, Wozniak, Jobs and Gates garage endeavors against IBM, HP was born in a garage, “off Broadway” plays, Film festivals, and so on. I think the past has some interesting parallels to today’s YouTube.

      Also, for Marina, she can be a major influence and she can be the innovator in the New Media field in many ways. She can take small risks and monitor the results and make quick changes. Yes, you are correct, the O’Reilly graphics have been pathetic.

  9. Chemikal says:

    In most businesses, the ones who run them consider the consumers to be fat retarded pidgins. The funny thing is that in some cases, they happen to be right. :D
    Pay more credit to the consumer, and maybe the consumer will pay you back! Just a thought…

  10. Chemikal says:

    It’s only normal… It’s a good thing Google has more money than you can imagine, otherwise YouTube wouldn’t be anymore.
    I think that they are loosing money simply because they don’t have a good income plan. And they don’t…
    Anyway, I can’t believe that the internet mostly is kept alive by the adds that the majority of us hate so much…

  11. CampKohler - Sacramento CA says:

    The HP study link justs gives me a clicking noise and a blank page.

    Puzzle of the Day: What characters did M type on the line above “This is why…”?

  12. suprstock says:

    wonder which it will be, :lol: sheep or wolves?

  13. Captain Jack says:

    YouTube is becoming a [white elephant] for Google. I don’t think Google is at fault here, but YouTube’s current management team. I’ve seen great products die a horrible death from poor decisions from the big wigs. A top of my mind example would be Corbin Motors. Let’s hope this new change on April 16th makes a difference for them. If not, they will be quickly eaten up by the smaller companies.

  14. greatestpotential says:

    :twisted: Nothing Changes :twisted:
    brought to you by the council of the absurd

    • Captain Jack says:

      That’s because people refuse change and fight [tooth and nail] to stop change. In my personal experience I have had city counsel members fight me from offering teenagers a new opportuning extra curricular activity other than sports. I even seen a counsel member quit the counsel membership for the refusal to make changes. So when you talk about change, take a closer look at who is fighting to stop those changes. :cool:

      • bsomebody says:

        Today’s word, “Conservative” has been brought to you by our friend, Captain Jack. :razz:

      • greatestpotential says:

        :mad: With YT if people choose to refuse change that’s their prerogative because it’s Toms, Dicks, Janes and Harrys that are the ones who are paying for internet service and this is the internet. It’s Sam next door and Jane up in apt. 10 who is making their own videos and placing them up on the tube. It’s not like these people impose a threat to democracy yet a cloud of punishment in the form of monoply always seems to loom over everyone’s head. It’s humans practicing their own creative endeavours and then sharing it with others and most of the time it’s vacationers who just want to present a slideshow from their trip to the grande rapids or whatever. It’s their time spent and it’s their money. Since when did artistic license rights get tossed out with the baby and the bathwater? Who is calling the shots here anyway :!:

  15. bsomebody says:

    @wordlover, No good deed goes unpunished. :roll:

    • wordlover says:

      I guess I’ll do some bad things so I can be rewarded… :roll: :lol:

      • bsomebody says:

        uhhh… That’s the spirit? :???:

        We know what we do and what our consequences will be. Do what’s right – come what may. :cool:

        • wordlover says:

          No good deed goes unpunished.

          Now I ask you: That’s the spirit? :???:

          • bsomebody says:

            I may have resorted to hyperbole, but the essence of my statement is true. Anytime I consider offering a hand to anyone, I consider that I am opening myself up to negative repercussion. I am not saying that I do not offer the help, but I am well aware of potential negative backlash. Occasionally I am rewarded by gratitude of some kind, and all that bad ju-ju simply floats away. :grin:

            Some may call me a cynic, but offering a helping hand will often result in that hand getting bitten. :cool:

    • James says:

      @wordlover????? WHAT HOW DARE YOU THIS IS HOTFORWORDS.COM!!!! NOT TWITTER!!! :evil:

      Hey bsomebody, when you said;

      “… but offering a helping hand
      will often result in that hand getting bitten.”

      reminds me of this cartoon a long time ago.
      It goes something like this.

      At this very busy intersection of Main Street, there stood an elderly lady leaning up against the light pole. A young exuberant Boy Scout came by and grabbed the lady by the arms and proudly assisted the elderly lady across the busy intersection.

      When they got to the other side, the lady whipped out her umbrella and beat the living daylights out of the Boy Scout. She exclaimed, “what the hell is wrong with you young whipper snapper! I didn’t want to cross the street, I was taking a rest before going into the store.”

      Yeah, life is like that sometimes. :grin:

  16. I’m not sure I buy into this. They did let slip some pertinent facts without providing the numbers or trends to allow us to properly assess some things.
    For them to say they are losing money and paying for us to view their ads, is one thing I doubt to be true.
    There is no data to show the trend before this threshhold was noticed, so it comes down to one sure thing.
    They are not holding onto the advertisers, and my best guess is they have had a recent surge in lost advertiser dollars, not indicated here. This would explain much of their claims, and provide the bench reference from which to state exactly how much is being lost, in terms of revenue.
    If an advertiser sees no offset in income from placing ads with Google – they’re going to cancel; cut their future losses and eat the costs associated with the budget expenditure failing to produce expected sales.
    Another way to look at it is this: consumers looking at their ads are not buying, or buying considerably less than during the last business cycle. The numbers they present from this losing cycle are being projected to an annual forecast – and do not represent any actual loss over that annual period (so it’s just speculation on futures).
    What they expected was growth, which did not happen, and they are presenting this as a loss – when in fact no real loss has occurred.
    They counted their chickens before the eggs hatched and even though more “eggs” were produced, the number of chickens remains the same. The only true loss was that sustained for admin costs, shown to be $250,000 over an unspecified period – could be based on the annual projection, or the last business cycle (unclear).
    So, why would they go to all this trouble? They have to explain, to clients who have not left them, a reason for paying clients to stay without divulging that they have lost clients whose business was not improved, and did not see a return in their invested advertising dollars.
    Other factors could also be that clients either defaulted or are late making payments; a real sustained loss.
    None of this was to difficult to figure out, once I read everything presented and saw that big pieces were missing from the picture.
    The DMCA as a factor is more of a ruse upon which to blame these losses, than has had actual impact. There has not been enough elapsed time to trend this as a factor. Losing clients would definitely have an immediate impact suchas what we are shown in this report.
    Don’t believe everything people tell you – especially on the Internet, when it comes to business. :mrgreen:

    • neuroway says:

      If you can’t read someone’s mind, then you can never know for sure if it’s voicing the truth or not. Only one thing is sure. Business is indeed a dirty and cunning poker game. And the world as it is has a certain and very strong penchant towards hypocrisy.

      Your claim is valid. As valid as Google’s. Unless one of you two is proven right or wrong, it all deals with belief and trust.

      As a matter of fact, you just raised an interesting issue. Since you said that, and since I don’t trust you more than I trust google, I therefore choose not to believe anyone of you and not to give a $h1t about whatever you say or whatever google says. And another thing is quite sure. If I look for information about something, I prefer to ask google than ask cha cha. Google certainly gets my vote on that. :smile:

      To feed the sheeps or to feed the wolves: that is the question:
      Whether ’tis nobler in the mind to suffer
      The slings and arrows of outrageous fortune,
      Or to take arms against a sea of troubles,
      And by opposing end them? :mrgreen:

  17. freebird says:

    If they want to close down for a day and give me $1 million… I would be saving them $650,000. How do I reach Mr.Google and tell him about this wonderful idea? :shock:

    • freebird says:

      Marina et al…

      If Mr. Google goes for this idea, let’s have a HotForWords party at Sunset and Vine… music, dancing girls, [ the whole nine yards ].

      • freebird says:

        I phoned Google and they said… “sorry there is no Mr.Google.” Oh! So I told them how sorry I was to hear he passed on.

        I told the lady how they might turn the YouTube business into a very quick money-maker, but, I think it went right over her head.

        Change the name to YouBoob… Everytime you click thru an ad on YouBoob you are entered in a lottery.

        Win prizes… like late night dinner cruise off coast of Somalia, leisurely bike ride through Bagdad and so on. [ BOOBY PRIZES! ]
        … prizes are transferable too!
        :roll: :shock: :roll: :shock: :mrgreen:

    • Yeah, but your cut only comes to $1-2 :mrgreen:

      • neuroway says:

        Is a Youtube entrance ticket worth $1 or $2? Is a google run worth 2 cents? Is a new computer worth a grand? Is a Big Mac worth $5 bucks?

        Very good question for someone who’s not addicted to any of this.

        • What are you talking about? :roll:
          “Is a Youtube entrance ticket worth $1 or $2?”
          Since you are just sniping, let me ‘splain to you what my remark meant.
          Freebird thought if Mr. Google shut down for a day, they could save $1,000,000 and send him $650,000.
          My remark reminds him that his cut only comes down to $1-2, not any more than that.
          “Is a new computer worth a grand?”
          Now you are being a ridiculous little carpy thing.
          Nobody said squat diddley about computers.
          You just added that to be argumentative, and you sound a fool for it.
          “Is a Big Mac worth $5 bucks?”
          You gotta be shitting me…
          Now, you sound like a little bitch!
          Shut up, you stupid …!
          “Very good question for someone who’s not addicted to any of this.”
          SHUT (THE FUCK) UP!!!
          Nobody asked you! You don’t have any answers!
          You just have foolish and stupid questions!
          Is it your period, or WHAT?? :mrgreen:
          You’re PMSing all over the place today – sheesh!

  18. ihearbs says:

    the copyright censers, thought police, and views adjusters be spencive too.

  19. leonard says:

    Such is life…. :roll:

  20. neuroway says:

    “If we were all given by magic power to read each other’s thoughts, I suppose the first effect would be to dissolve all friendships.”
    – Bertrand Russell (1872-1970)

  21. dernevadarebell says:

    Ouch, and I thought that GM had it bad.

  22. hs4mm says:

    As far as I can tell, there is nothing underlying google income except for click based ad revenue. Another thing that needs to be examined is whether people who place click based ads in fact generate a profit for themselves by doing so.

    • hs4mm says:

      Clarification of “needs to be examined” used above: I mean, it is in the best interest of the people placing the ads to do such an examination for themselves.

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