YouTube will lose $470 million in 2009 – even more than the New York Times
If you think Google is infallible–and frankly, very often they seem to be–take a moment to consider the hemorrhaging going on at one of its most high-profile investments, YouTube. Farhad Manjoo writes in Slate that analysts at Credit Suisse estimate that YouTube will lose $470 million this year. This would be considered a horrific number even in the newspaper business. (Still chump change if you’re running a car company or a bank, of course.) What’s more, monetizing some of the most popular content on YouTube is problematic, because a significant amount of it is pirated. And the creators of the content–often TV networks–are unlikely to agree that YouTube deserves advertising revenue generated by their content. Can’t say that I blame them.
The only good news for Google is that they’re sitting on a pile of hundred-dollar bills roughly the size of the Great Pyramid at Giza, which means they will have more time to work on a solution that most other companies would. That being said, Google is caught in a trap of their own devising, and a lot of very smart people don’t see a good way out of it. If they can’t stop the bleeding, Larry and Sergey may even have to downgrade to a 767 and/or cut back on the Alaskan king crab legs in the employee cafeteria. And a pity that would be.