In talking with Evan about final paper topics, I came across a rather surprising headline: in a recent report published by Credit Suisse, YouTube is projected to lose its parent company, Google, $470 million this year alone. Wait…huh?
Since when was one of the most visited websites in the world losing mad dollar? (I tried to find a ranking of most visited websites in the world, but there were so many lists from so many different sources I decided not to bother. YouTube, however, was consistently in the top 10.) How could a website visited from so many people be so unprofitable? The potential advertising revenues must be enormous, right?
Turns out, not exactly. The Slate article sights the fact that there’s a simple reason for advertisers shying away from YouTube: they “don’t like paying very much to support homemade photos and videos.” Apparently the video of Johnny hitting himself in the head with a piece of wood holds little advertising potential. Very few companies want to associate themselves with a lot of the, well, crap that is on the website.
So what will become of YouTube? The storage and transfer of millions of videos consumes massive amounts of cash and, so it seems, may not be a self sustaining business. YouTube sells ads on fewer than 10 percent of its videos, but must pay for playing 75 billion videos for roughly 375 million users in a year. There are concerns Facebook may run into similar issues storing every college students’ photo albums of drunken Wednesday shenanigans.
In my opinion, Facebook and YouTube are what we now could consider a public service. They help facilitate communication; record and share our life experiences; serve as educational tools; allow people to be more aware of the world they live in; etc. Could you imagine if Facebook of YouTube were suddenly shut down tomorrow? That’d suck! Vast amounts of information and data (yes, much of it irrelevant) would be lost.
So what will it take to keep YouTube alive? I’m not sure, although the Slate article offers a few suggestions. Maybe one extreme measure would be to subsidize the service…just a thought.