From the Silicon Alley Insider:
Credit Suisse estimates YouTube will manage to rake in about $240 million in ad revenue in 2009, against operating costs of roughly $711 million, leading to a shortfall of just over $470 million. This half-billion dollar loss comes after more than a year of feverish experimentation in various forms of advertising, cross-product embedding, licensing and partnership deals. YouTube is adamant that ultimately they’ll find an advertising solution that will enable the ungainly behemoth to reach profitability. Looking at the math, it doesn’t seem likely.So what can Google do to turn the financial picture around?:
That last bit sounds an awful lot like what newspaper companies are being encouraged to do.
Google could take a lesson from its neighbor, Hulu, and focus only on proprietary content with existing consumer loyalty and real monetization prospects. With its massive audience, this is a viable option, and a direction in which YouTube has already taken some baby steps. Axing user-generated content would seem to be anathema given the site’s roots, but it may be the surest way of putting the business into the black.
Alternatively, YouTube could implement a subscription structure for the site, either monetizing certain members-only content, or requiring users to create a paid account in order to contribute content. With so many marketers looking at YouTube as part of their viral strategy, this too could be a viable option.