It's the same old story: YouTube is amazing, the press is obsessed with it, but the whole world is still waiting for the payoff. The 19-month-old site delivers 100 million daily videos, but so far,
all the company has to show for its traffic-generating prowess is a bunch of expenses. There's not much revenue at YouTube--and zero profits. While YouTube is starting to develop new ad offerings,
like its "brand channels," its popularity outpaces its revenue growth, which is leading the site into the red. The current estimate for its operating expenses is between $900K and $1.5 million per
month. Most of that is for computer servers and bandwidth transmission. YouTube doesn't make nearly enough to sustain that kind of monthly output, so the question becomes: What happens when the
funding runs out? YouTube has to figure out how to attract a broader group of marketers. It needs to put the stop on uploaded copy-protected content by creating separate, sponsored channels that
generate revenue. However, the problem is that media companies want to have control over their content. What's so great about YouTube is that users can upload any clips they find interesting. Giving
that control back to the brand owner would be very un-YouTube. The next step after fixing the rampant copyright problem has to be quick, five- to-10-second spots. No more. It could just be five
seconds of a brand image, but whatever it is, it can't be longer than 10 seconds. After that, people get annoyed. And consumers would largely accept it--begrudgingly at first, but they would accept
it.
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