YouTube: Notes to Self

When I’m doing a segment for a media show I sometimes catch myself making a few notes with key factoids, etc., that I think I may want to get to. Pace my earlier post about being a good panelist, I try hard to forget this stuff when I’m actually live on-air, but it’s good to at least think it through.

Anyway, here, from an about-to-be-nuked Notepad window, are my notes before my YouTube discussion today on NPR:

YouTube notes:

– YouTube is really, really …
   … big
   … fast growing
   … expensive

– Entire U.S. Internet backbone 16 tb/mo in 1994; 200 tb traffic a day in 2006 at YouTube (Library of Congress is 20 tb)

– YT bandwidth costs are $1m/mo; $3.6m in people costs a year –> $300,000/mo

– different media model
   – normal television’s cost/user fall with viewership
   – online media’s (traffic) costs increase with viewership. Go broke being successful.

– it’s a failing of the major media companies
   – packaging problem: album vs songs = shows vs. snippets

– advertising is a mess
   – the gorillas in the mist problem


  1. As always great food for thought Paul. As far as the economics go it srikes me that the issue is not that the cost goes up per user but what the corresponding revenue per additional user is. When I worked at we had great numbers in terms of users and traffic but it was costing us more to deliver the content than we got from advertisers.
    The problem is not size of the audience but rather whether there is any margin on advertising dollars. The question is, what is the per unit cost of delivering X minutes of video vs. the value to advertisers on a per viewer basis.

  2. Excellent points, Paul — and by Michael as well. For me, I liked the “gorillas in the mist” part :-)

  3. “Gorrillas in the mist” what?

  4. Much depends on whether bandwidth costs trend up or down. Regardless, despite Michael’s sound observation, broadband video’s business model is fundamentally limited by the incremental cost per viewer (so long as that persists) — each incremental user may be profitable, but unlike TV, the margin doesn’t grow with each incremental viewer.
    Kind of reminds me of magazine circulation economics, where it’s possible to lose money on each incremental subscriber, which can out pace revenue growth.

  5. The key to an organization like YouTube to survive survive if they can somehow manage to blend their model with an ondeman “Bittorrent” approach to pushing content out.
    As users are watching a clip they could simultaneously be pushing the portion they’ve already downloaded out to other viewers. The big challenge though would be getting the chunks of files in order rather than the random scattering of chunks as occurs with BT now.
    As for revenue I think the end result will be ads embedded into the video file at the beginning and/or a targeted ad/logo overlayed on the video (bottom corner type thing) based on the tagging of the file. (i.e. something with the tag “skateboard” in it would get an Airwalk shoe ad.)
    Youtube could then sell stats/ads up the line to advertisers based on what other keywords are popular with those users (and even more so track which users convert the most etc.)