YouTube now serves more than 1 billion money-losing views per day

October 9, 2009 | Paul Boutin | Comments | |

xinsrc_3020105250916984211336Fifteen million viewers watched CSI on Thursday night, making it the most-popular show on television. On that same day, YouTube served over a billion video clips — 66 times the number of views CSI got.

Yet YouTube owner Google is currently losing an estimated $1.5 million per day on the service, according to basic math done on some analyst reports by Internet Evolution blogger David Silversmith.

YouTube’s story has changed a lot from the big expectations of three years ago. At the time, the Internet economy was rushing forward, propelled by Web 2.0 startups and Google’s seemingly unlimited cash to spend buying other companies.

YouTube founders Chad Hurley and Steve Chen became media darlings and multi-multimillionaires. They announced their acquisition by Google via, duh, a YouTube video, in which Hurley ad-libbed that “two kings have gotten together.” The two seemed destined to follow in the footsteps of nerd-hero Google founders Larry Page and Sergey Brin.

But instead of taking the kingdom to the next level, YouTube has run up a huge video bandwidth bill, while not drawing in as much ad spending as everyone had expected. These days, YouTube is plastered with more and more intrusive ads, while Hurley and Chen are hard to find. Is there anything they can do? Maybe not. French video-sharing site Dailymotion hasn’t done any better, blowing through $34 million in funding on the cost of serving video as opposed to text content.

Years from now, YouTube will embody Web 2.0 expectations and disappointments. It’s changed the way we watch video, and it’s created a whole new class of video makers. YouTube has become our Library of Alexandria for video. But at some point, Google’s bad-cop CEO, Eric Schmidt, will need to deal with the fact that this wonderful site is a money-loser.

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About the Author, Paul Boutin

Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.

  • Name
    Is the Dailymotion figure supposed to be $34M? or is it $34 per vid or something like that...?
  • csun
    Nice article. For a long time, I agreed that YouTube was a mistake for Google. I believed that YouTube may never break even.

    But now, they are trying things like partnering with Time Warner to show high quality content. And that will bring high quality advertisers. And of course, they're still trying different forms of advertising in the videos or on the webpages.

    I now think that YouTube will eventually break even and be profitable. Would Google have it any other way? Outsiders can never really know how much money YouTube is making or losing. So I think the estimated $1.5 million loss per day is probably an upper bound.
  • You said:

    "Dailymotion hasn’t done any better, blowing through $34 million in funding on the cost of serving video"

    I have to disagree, considering that dailymotion recently reached profitability!
  • I don't think that the acquisition was a mistake for Google. What I do think is that YouTube can definitely be monetized way better. They stick to the same old advertising models. Where is the product innovation for which Google has been famous? They simply need to bring on board people who understand what advertisers will pay for this days, what they needs are and how to deliver. (yes, us, of course :-) or announce a tender for various solutions if internally the expertise is missing). The resources are obviously there, all is needed is a new roadmap for eyeballs monetization.
    YouTube sits on a tremendous asset, but unfortunately it uses it as a hummer.
    Thank you for sharing, Paul.
  • R
    Have patience people, youtube has a great brand name and the smart guys at Google will finally find a way to make money, btw reserve ur sympathies for GOOG, they make a ton of money and just enjoy all the youtube videos. It has changed so many things for the better, we mst all be greatful to Google for not being aholes like Apple or microsoft and being driven only by profits.
  • http://venturebeat.com/2008/06/01/roundup-youtu... how times change in a little over a year - compare and contrast.
  • Dune
    Why is YouTube so popular? To state the obvious: it's free. However, at some point, the world needs to come to terms with the fact that you can't generate content for free. Certainly not quality content. Why is TV going down? To state the obvious: loss of viewers turned off by advertising and corporate control, fleeing to the internet. Yet nothing is free, however much you might be able to create the illusion of it being free.
  • Thus the business model is give away for free something that is expensive and then get acquired.
    Why not give away gold for free and get millions of addresses of people where you have send the gold to.
    Then hope someone buys the company for the millions of addresses.