Comments on: Why YouTube Can’t Cost $1.65M a Day http://nerdlife.net/why-youtube-cant-cost-165m-a-day/ *Insert Witty Subtitle Here* Sat, 14 Jan 2012 16:38:53 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Sean Fitzroy http://nerdlife.net/why-youtube-cant-cost-165m-a-day/comment-page-1/#comment-1864 Sean Fitzroy Wed, 08 Jul 2009 16:38:11 +0000 http://nerdlife.net/?p=238#comment-1864 I find these arguments frustrating too. NOT buying YouTube would have been a huge mistake. Google controls text search and discovery on the web, and for a small percentage of their valuation they had the opportunity to control video search and discovery, and they took it. Why is everyone in such a hurry for Google to monetize YouTube — when Google isn't. Yes it would be nice but the current the ad market for video is centered around TV (macro deals built on handshakes and phone calls, that don't scale down to the micro level). Likewise there's little incentive for anyone to invest in building the micro-targeted ad system of the future for video until the dinosaurs go away, or at least until the market becomes fragmented enough that the inefficiencies of large media buys become too much to bear. Many people forget that Google didn't make any money as a search engine for a long time, until suddenly they did with Adsense/Adwords. Google certainly hasn't executed perfectly with YouTube, but the current obsession over YouTube's day-by-day or month-by month bandwidth costs is either mediocre link-bait journalism or analysts missing the much bigger picture, or both. I find these arguments frustrating too. NOT buying YouTube would have been a huge mistake. Google controls text search and discovery on the web, and for a small percentage of their valuation they had the opportunity to control video search and discovery, and they took it.

Why is everyone in such a hurry for Google to monetize YouTube — when Google isn’t. Yes it would be nice but the current the ad market for video is centered around TV (macro deals built on handshakes and phone calls, that don’t scale down to the micro level). Likewise there’s little incentive for anyone to invest in building the micro-targeted ad system of the future for video until the dinosaurs go away, or at least until the market becomes fragmented enough that the inefficiencies of large media buys become too much to bear.

Many people forget that Google didn’t make any money as a search engine for a long time, until suddenly they did with Adsense/Adwords. Google certainly hasn’t executed perfectly with YouTube, but the current obsession over YouTube’s day-by-day or month-by month bandwidth costs is either mediocre link-bait journalism or analysts missing the much bigger picture, or both.

]]> By: Brian http://nerdlife.net/why-youtube-cant-cost-165m-a-day/comment-page-1/#comment-1652 Brian Fri, 29 May 2009 16:57:11 +0000 http://nerdlife.net/?p=238#comment-1652 <a href="#comment-1650" rel="nofollow">@Jon Smirl</a>: Thanks for the clarification. I was thinking more along the lines of ISPs peering to Google itself. I realize that YouTube tips the scales strongly in the "sending" category, but I figured Google could make a strong argument for peering for the sake of user experience (i.e. "Well Verizon is peered to us, don't you want the same speed for your customers Comcast?") @Jon Smirl: Thanks for the clarification. I was thinking more along the lines of ISPs peering to Google itself. I realize that YouTube tips the scales strongly in the “sending” category, but I figured Google could make a strong argument for peering for the sake of user experience (i.e. “Well Verizon is peered to us, don’t you want the same speed for your customers Comcast?”)

]]> By: Jon Smirl http://nerdlife.net/why-youtube-cant-cost-165m-a-day/comment-page-1/#comment-1650 Jon Smirl Fri, 29 May 2009 12:24:24 +0000 http://nerdlife.net/?p=238#comment-1650 Peering arrangements require symmetrical bandwidth exchange. When these exchanges stop being symmetrical the parties start charging. YouTube is about as unsymmetrical as you can get. No one is peering with them for free. Peering arrangements require symmetrical bandwidth exchange. When these exchanges stop being symmetrical the parties start charging. YouTube is about as unsymmetrical as you can get. No one is peering with them for free.

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