According to an analysis by Credit Suisse, Google will lose about $470 million this year operating YouTube. Clearly, selling ads around user-generated and illegally-posted content isn't really working. Already they've cut upload limits to 10 minutes. Expect to see more of the same... The high costs of running YouTube (http://www.slate.com/id/2216162)

The 10 minute limit has much, much more to do with people uploading copyrighted works than bandwidth specifically because the uploading limit is around 1 GB. It used to be multiple times less than that.

If anything, Google would chalk the losses of YouTube to being a cost of doing business. And I can't see it ever being profitable either.

Interestingly, Google bought YouTube because their own effort (Google Video) couldn't scale as well as the internal server infrastructure at YouTube did. And the rest is history with Google Video slowly integrated in to YouTube.

470 million is chump change for Google.

They have to find a way of monetizing Youtube though and adv revenue is
probably not going to gut it. They should be developing paid services and
delivering something like a YouTube Pro.

YouTube is one of the prime pieces of real estate on the internet. If Google can't figure out how to make money, then shame on them.

Even the practice of trying to block content to protect copyright makes fair use versions of videos fall victim (cover versions of songs, transformative works). Take the recent WMG takedowns as an example. Tons of people are fed up with this are moving off of YouTube (and they're veterans of the site).

Cause of this and the commercialization of Youtube into a site with PPV TV shows and Movies, I do predict that YouTube is doomed.

"prime piece of internet real estate?" Anyone can do that if they're willing to burn $470million by giving masses of broadband away free. The question is: how do you turn that around and make a profit? I don't think it will completely disappear, the brand itself is worth a bit of money, but I can't see this going on.

Look at what happened to Napster - how many folk were interested once they'd got over the legal stuff and started charging...

Sure, Google can continue funding it, but I think their shareholders may have something to say about that. Ultimately, what's the benefit?

I'm frankly shocked to read of the money losing proposition of YouTube. I also started an Internet endeavor on the net a couple of years ago, and I too, have to admit we haven't found a way as of yet to actually make money with it. Everyone I know of, who has a web enterprise is searching for that illusive e-commerce business model, which will create a profitable cash flow. The only conclusions we have been able to make about some of the true keys to Internet financial success is directly related to extremely high viral volume hits per day. If you can create a total runaway viral Internet smash hit, then this can cross over into DVD home video and commercial network deals. The second only proven way to make a specific bundle of cash off of an Internet enterprise is to be able to receive lucrative offers to be bought out by another enterprise because of the attractive popularity or innovation of your net endeavor. You then take the cash and run.

I've always been skeptical when I hear folk saying how they expect to market their film on the net - particularly when they talk about viewers making voluntary contributions!

YouTube was a bold adventure, and all credit to the guys for putting their cash on the line (Google shareholders may think otherwise). On the other hand it has helped foster a belief that everything on the net is, or should be, for free. That's a big debate of course, but my point here is that YouTube hasn't really helped those of us who'd like to make a financial return on our indie film - many people now expect their entertainment to be a free download.

I've always been skeptical when I hear folk saying how they expect to market their film on the net - particularly when they talk about viewers making voluntary contributions!

YouTube was a bold adventure, and all credit to the guys for putting their cash on the line (Google shareholders may think otherwise). On the other hand it has helped foster a belief that everything on the net is, or should be, for free. That's a big debate of course, but my point here is that YouTube hasn't really helped those of us who'd like to make a financial return on our indie film - many people now expect their entertainment to be a free download.....Hey Karel, yeah, the everything for free on the free Internet idea kills when you're on the content creation side of that equasion. We are now close to releasing Ep 2 in our dramatic suspense thriller series Please Stand By (Please Stand By - Web TV from Hudson, St. Lazare and Pincourt to the World (http://pleasestandby.ca)). We began the whole adventure (And it has been thus and much more !) in the early Spring of 2007. We launched production of the pilot episode as a grass roots-community based-experimental project. Most of the folks who passed in front of the camera had little to no experience in acting and had to be trained on camera by yours truly. The end result debuted on our website on Nov 1st 2007 to a *huge* success-way more success than any of us thought would be possible. You can stream video on demand from our website to your flat screen HD TV (If you have the proper output capability with your computer's graphics card) currently at HD 720 p30 resolution. Ep 2 will be streamable at 1080 24p. We went from 20 hits per day to over a 1000 in 2 weeks following the initial release of the pilot episode. The local buzz was extremely high around Montreal.

At this point, we realized we could produce a local dramatic Internet TV series at some level of professionality, but in order to sustain the production to a much higher level of entertainment quality and overal production professionality for the long haul, we would have to take the fateful decision to transition from a volunteer production to a paid-professional production, and it is at this point where we are now with PSB and Episode 2, where I think the web presentation and distribution hits a big wall ! Allow me to explain.

For the first year we were on the net (2007 to 2008) we tried to derive an income stream via placing a PayPal tip jar on the site, which is the digital equivalent of the traveling minstrel group passing around the hat after a live theatre performance. Result = not one donation ! Ziltch ! Now this could be because too many folks who came to our site thought the first episode was simply not worthy of any donation, but we were unable to be sure. Next, it was discussed we would wait until either episode 2 or episode 3 were posted and we would create a huge publicity blitz all over the Internet and locally, so that our series was sure to go "viral" and then we could start to offer $0.99 downloads of the episodes via a DVD or Blu-ray .ISO image. Our viewers could then burn to disc themselves and we could circumvent the costs of DVD replication and shipping. The argument was (and still is) $0.99 isn't much, but what if a million viewers or more considered our work to be worth at least 99 cents ?

Sadly, none of us working on this project have any advertising or marketing experience. We are still locked at the transition point of going from a volunteer to a paid professional production. We are currently finishing off the post production and pickup shots still needed to get to picture lock status with a personal financial capitolization of close to $78K Canadian. (I've bugun to seriously doubt my sanity). We are still looking for the way to make money on the Internet. (Is there a way ?)

A quote comes to mind;"On your deathbed you regret the things you didn't do, not the things you did." I'm not saying that this'll put you on your deathbed(!) but doing it and risking failure is way better than never having tried. But man, this thing about people expecting stuff (in effect our labors) for free... It's selfish and dumb.

Make sure to post a link here when it's up.

I take it you've approached the usual TV channels? Or the NFBC?

I use Chrome, so I didn't get a link. You might consider looking into that. I got it on IE though!

And I must say: Wow! What an achievement. And everyone involved wasn't a professional? I'm looking forward to episode 2. You will certainly get 99c from me!

Shame about the NFB.
BTW sorry if my previous posts have sounded a bit doom n gloom. Over here in Europe (usually a haven of sanity) media folk are debating the convictions of the Pirate Bay guys. There have been demos in the streets of Stockholm with youths apparently demanding the right to download stuff for free! Bring back Vietnam, I say...

Your last post has disappeared....

Oh no, not another of these 'upgrades'...

BTW sorry if my previous posts have sounded a bit doom n gloom. Over here in Europe (usually a haven of sanity) media folk are debating the convictions of the Pirate Bay guys. There have been demos in the streets of Stockholm with youths apparently demanding the right to download stuff for free! Bring back Vietnam, I say...

There was a Swedish guy saying that Pirate Bay is like a library. My understanding is that libraries pay for the lending rights and in the end these are paid by a mix of local authorities, government, membership fees etc. Everything costs somewhere down the line.

Youtubes not going anywhere. Really they've never turned a profit, so losses last year is no big surprise. Remember the beginning of the net, when tv station had their own website, for no apparent reason. Their ads sold very little, if at all. Now they get fairly decent rates on those ads, it's an important part of their ad-sales business. IIRC youtube just began selling ads recently, so it will very likely only increase, as ad agencies & media buyers slowly realize how much more time people are spending online, as opposed to watching TV (factor in time at work on youtube).

Really though, it's a longterm investment. In a few years content will potentially bypass the current tv structure of distributed thru a network or channel, as producers will deliver straight to consumer, as the technoligies of internet, computer monitors & HDTV merge (hello OLED monitors). Youtube's name is priceless when it comes to branding Google for internet video & puts them up there with similar companies with the forsight to deliver web content straight to consumer like Hulu, Fancast & Netflix, giving Google a dog in the fight.

Free entertainment on the internet is a not a new business model. People have received free radio and tv for decades. Money is made through advertising. Nobody is really going to click on the annoying pop-up ads that will then earn you a nickel or whatever but someone will end up sitting through a 10-30 second ad to get to the video they want to see. Thus the success of Hulu. I would suggest adding someone to your crew that is in charge of finding sponsors for your independent work that will stream on the internet.

Have you managed to do that?

We are still locked at the transition point of going from a volunteer to a paid professional production. We are currently finishing off the post production and pickup shots still needed to get to picture lock status with a personal financial capitolization of close to $78K Canadian. (I've begun to seriously doubt my sanity). We are still looking for the way to make money on the Internet. (Is there a way ?)

Finally some insight. Producing content actually takes skill and financing in order to eat, live somewhere besides a tent and afford the technology to produce the content. At some point someone has to pay (usually the viewer). YouTube, and sites like it, are the HMOs of web video and content production. And while your sanity is in question the sanity of someone who would give you $78K with no hope for a return on investment is even more questionable.

Personally I would have wanted to figure out where the "income" part was going to come from and how it all works. For $78K I'd be wanting to sort out that issue before I "invested" anything, first building a functional prototype if possible.

I'm kinda scared for you. Hope it all works out.

Andrew

Just got this mail from someone running a music upload service:

"I'm sorry to inform that I will close down this site. My reasons to put the online was simple. Let's make money to sell our creations. The money can only be made by selling something to mobiles. When previously you made 1M record sales, I could be an millionaire. Nowadays, you make 1M fans from Google's Myspace/Youtube and start to beg the money? Is that what you artists wan't to do?"

It's like swine fever. One of the reasons we're having a recession is this infectious loss of confidence...