Analysts keep bringing it up. Reporters do, too. How much money is Google losing on YouTube? And can they afford it? The lingering question that affects Internet marketers the most is what happens if Google decides they can't afford it. If you are using YouTube for marketing, should you be worried?
First off, no one knows how much YouTube costs Google, nor how much revenue it brings in. Given the cost of servers, storage, and bandwidth for streaming so much video over the Web, it's certainly true that it costs them a bundle--far more than they ever expected.
Image via CrunchBase
Google continues to tweak its offering, but admits that the right formula has not appeared yet. The question is whether Google can afford to lose this much money, with it ever increasing as long as that formula remains elusive.
It probably can afford it for the foreseeable future. The question is whether it will decide to, which might depend more on attitude than data.
YouTube was expected to be a huge advertising success. I mean, how could it miss? Videos are the most popular form of media and YouTube's model created the content for free, so how could advertisers resist all those eyeballs? But somehow, they have, making YouTube an immense disappointment for Google.
On the other hand, listing off the other free content plays, such as Gmail, Google Docs, and the forthcoming Google Wave, which one of those is profitable? I'd bet that none of them are. And, they were never expected to be, at least not by now.
If Google can pay the freight, and if Google can change its attitude about YouTube, so that it's a long-term play, just like those other user-brings-the-content initiatives, Google can emerge as a leader in video and will eventually figure out the advertising plays for all of them (or figure another way to make money). If Google succumbs to a disappointment in YouTube not shown in Gmail, for example, it might miss out on a big market down the road.
So, if you use YouTube for your marketing, I wouldn't be terribly concerned about what you hear. Yes, I'd be posting my videos on Vimeo and other sites, too, just as a backup, but I wouldn't be worried that YouTube will disappear any time soon. If anyone has the deep pockets to suffer through YouTube's expensive adolescence, its Google.
Mike is an expert in search marketing, search technology, social media, publishing, text analytics, and web metrics, who regularly makes speaking appearances.
Mike's previous appearances include Text Analytics World, Rutgers Business School, SEMRush webinar, ClickZ Live.
Mike also founded and writes for Biznology, is the co-author of Outside-In Marketing (with James Mathewson) and the best-selling Search Engine Marketing, Inc. (now in its 3rd edition, and sole author of Do It Wrong Quickly, named by the Miami Herald as one of the 11 best business books of 2007.
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