The buzz after YouTube's CEO vacationed with media moguls like Rupert Murdoch was that the video sharing company was about to cash in by selling to an industry giant. But no word of a deal has come down the tubes. In fact, the video giant is about to go down the tubes. Here's why.
- It's a money-sucker. YouTube's bandwidth cost was estimated at a million bucks a month earlier this year. As the site grows, that cost must rise too, meaning that YouTube has to raise over $12 million a year for bandwidth alone. Add a few million for costs like offices and staff, and YouTube must be eating up a cool $20 mil annually just to stand its group, much less to grow. How long until that cash runs out?
- The money's not rolling in. A YouTube insider says that YouTube's ad revenue goals for July and August are $1 million. In June, the direct sales team brought in $0. The VP of sales is pulling projection numbers out of breathtakingly thin air.
- No one will buy it. YouTube's million a month comes from venture capital. And venture capitalists demand a sale (because a company without a revenue plan sure isn't going public). Dot-com pundit John Battelle nails it: No one needs YouTube. The networks, scared of the aforementioned piracy, won't bite, though they may make cheap distribution deals while the site lasts.
- The press points to the piracy. YouTube doesn't really run on pirated work — most of this month's most popular vids are original, and most borrowed clips are simple fair-use cases. But to look at media coverage, you wouldn't know that. Every high-profile NBC takedown notice wipes out the press from five hundred original videos.
- It's boring. Speaking of those original videos, it's clear what'll happen when the media buys out all the good vloggers (and some lame ones) as the New York Times reports. The cream of the crop will be rescued from YouTube and installed on TV, in other network-run web sites, or in theaters near you. Eventually Internet video will turn into a churning factory of mediocre talent, and YouTube will be left with the dregs.
- The bloggers are revolting. When Boing Boing attacks, and other major blogs join it, who cares whether their criticisms of YouTube are true? The damage is done, and YouTube doesn't have the response team to handle it. Boing Boing writer Xeni Jardin says it took a full day for YouTube to respond to the accusation that it planned to sell its users' videos.
- You can't get porn. Whatever the gains — legitimacy, lawsuit avoidance — from YouTube's no-porn policy, the loss is all the traffic such an offering could bring. It's not like online porn movies are an unproven market.
- It's ugly. Have you watched a YouTube video lately? The resolution is 2002-quality. Grimey. Gross. Someone else could do better.
- Its competitors pay you money. And someone else is doing better, as the Internet video scene becomes a series of YouTubes. Revver slaps an ad at the end of each video. The person submitting that video gets half the revenue. Blip.tv is starting its own 50/50 split. Both beat the hell out of YouTube's 0% split.