YouTube Growing ... Like Cancer?
The video-sharing Web site is a runaway success -- everywhere but on the bottom line.
With all the excitement, it's easy to forget that the video-sharing pioneer's business so far amounts to a whole lot of expenses, not much revenue, and no profits. YouTube took on the job of creating the business model for a new medium where anyone can post any video. While it's starting to develop new ad offerings, its popularity is driving up costs that established Web giants, such as Google and Yahoo!, are able to spread out. YouTube spends a tidy, and growing, sum to stream its short clips. Current estimates range from $900,000 to $1.5 million per month. Much of that goes for computer servers and transmission bandwidth. But because the company is charting a delicate course in how it handles pirated videos, its legal costs could balloon if lawsuits start piling up.
For now, YouTube's execs are resisting turning to ad pros for solutions. The company seems determined to rely on its visitors to filter out pirated and vulgar works. And it's challenging marketers to find creative ways to tap into its community, such as running film festivals or sponsoring videos posted by studios.
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