Internet Evolution Analysis: Google Losing Up To $1.65 Million a Day on YouTube

Income from premium offers and other revenue generating programs don't offset YouTube expenses of content acquisition, bandwidth, storage, and other costs, calculations show

NEW YORK, April 14 -- It must have seemed a smart idea when Google paid $1.65 billion for YouTube in 2006. But more than two years later, Google is losing as much as $1.65 million a day on the Web's most popular video site, according to calculations and analysis from Internet Evolution.

  You can read the full report here:

  http://www.internetevolution.com/author.asp?section_id=715&doc_id=175123

"The average visitor to YouTube costs Google between one and two dollars," said Internet Evolution Editor in Chief Terry Sweeney, citing the estimated $513 million to $663 million in annual YouTube losses divided by its 375 million unique visitors. The report, written by David Silversmith, drew from a variety of sources, including Bear Stearns, comScore, Credit Suisse, and Google itself.

"Google is, in effect, paying YouTube consumers to visit the site, despite premium offers and other revenue-generating programs that can't keep pace with the site's expenses -- content acquisition, bandwidth, and storage, to name a few," Sweeney said. How long Google expects to continue subsidizing the site or when it expects to break even is less clear. YouTube refused comment on the problem.

Google's plans to serve up advertising on YouTube have had limited success. YouTube sells homepage roadblock ads that cost $175,000 per day and branded channels at $200,000 apiece; neither has been widely deployed, according to the Internet Evolution report. Google AdWords image advertising remains the primary revenue source for YouTube.

About Internet Evolution

Internet Evolution (www.internetevolution.com) hosts more than 140 world-famous Internet experts -- such as Kevin Mitnick, once the most-wanted computer hacker in the world; Dr. Lawrence Roberts, inventor of packet switching, and one of the world's foremost authorities on telecom network architectures; Vint Cerf, Vice President and Chief Internet Evangelist for Google; and Craig Newmark, the founder of Craigslist.com -- all of whom are addressing today's critical socio-economic issues within its ThinkerNet blogosphere. In March 2009, Internet Evolution won three prestigious Min's Best-of-Web awards, including Digital Team of the Year, Best Community/Social Networking Site, and Best B2B Magazine-Branded Video.

About TechWeb

TechWeb (http://techweb.com/aboutus), the global leader in business technology media, is an innovative business focused on serving the needs of technology decision-makers and marketers worldwide. TechWeb produces the most respected and consumed media brands in the business technology market. Today, more than 13.3 million* business technology professionals actively engage in our communities created around our global face-to-face events, Interop, Web 2.0, Black Hat, and VoiceCon; online resources such as the TechWeb Network, Light Reading, Intelligent Enterprise, InformationWeek.com, bMighty.com, and The Financial Technology Network; and the market leading, award-winning InformationWeek, TechNet Magazine, MSDN Magazine, and Wall Street & Technology magazines. TechWeb also provides end-to-end services including next-generation performance marketing, integrated media, research, and analyst services. TechWeb is a division of United Business Media, a global provider of news distribution and specialist information services with a market capitalization of more than $2.5 billion.

*13.3 million business decision-makers: based on number of monthly connections

About United Business Media Limited

UBM (UBM.L) focuses on two principal activities: worldwide information distribution, targeting and monitoring; and, the development and monetisation of B2B communities and markets. UBM's businesses inform markets and serve professional commercial communities -- from doctors to game developers, from journalists to jewelry traders, from farmers to pharmacists -- with integrated events, online, print and business information products. Our 6,500 staff in more than 30 countries are organised into specialist teams that serve these communities, bringing buyers and sellers together, helping them to do business and their markets to work effectively and efficiently. For more information, go to http://www.unitedbusinessmedia.com/.

  Contact
  Amy Averbook
  TechWeb's Internet Evolution
  (212) 925-0020 x112
  averbook at lightreading.com