July 20th, 2009
YouTube: Uploads don't hurt our bottom line
YouTube said Monday that speculation about infrastructure costs for the video site is off base. But YouTube didn’t divulge any additional details.
In a blog post, YouTube did a myth busters riff and said:
There’s been a lot of speculation lately about how much it costs to run YouTube. With revenue estimates ranging from $120 million to $500 million, and costs on an equally large spectrum, it seems people can pick any number to fit any theory they have about our business. The truth is that all our infrastructure is built from scratch, which means models that use standard industry pricing are too high when it comes to bandwidth and similar costs. We are at a point where growth is definitely good for our bottom line, not bad.
The takeaway: YouTube’s infrastructure can handle video on the cheap and Google can scale that business. Yet that infrastructure isn’t cheap enough to make YouTube profitable—if it was Google would tell us or at least drop a line on an earnings conference call.
The rest of the latest post focused on YouTube’s monetization, advertising progress and video quality. Why now? For starters, analysts have been openly questioning whether YouTube is a money pit that should charge for uploads. The other message here is that YouTube can compete with Hulu for high-quality advertising.
Consider this another volley in a YouTube PR offensive that kicked off on Google’s earnings conference call.
Also see:
- Google moves to show YouTube has ‘a very credible business model’
- The cure for YouTube’s ills: Charge for uploads
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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