YouTube Loses Money; Google Plays It Down

Michael Bowler | RSS | Thu, Jun 18 2009 | 0 Comments

YouTube, a Google subsidy, has incurred losses that some analysts may have overblown. Google does not seem to mind the misperception, according to an internet economics study released yesterday.

RampRate Inc. projected a $174.2 million loss by YouTube, a far cry from the $470.6 million loss estimated by Credit Suisse analysts in April. This Credit Suisse research report that became a popular read on Wall Street and the internet. Since Google bought YouTube for $1.76 billion in late 2006, it still has yet to prove it is financially lucrative for Google. It has, ironically, proven financially lucrative for many YouTube users, reminiscent of Chris Crocker (“Leave Britney Alone”), “lonelygirl15” (an international drama sensation) and Brandon Hardesty (the kid with the strange faces and noises in the Geico commercial who has also signed on for several movies).

Google has agreed that YouTube is not profitable, though they have refused to provide any specifics. Google’s CFO, Patrick Pichette, says that estimates by analysts tend to lead to inaccurate conclusions. “Most people build outside views of what it costs us to do things, and often they exaggerate,” Pichette said in an interview with Mclean’s, a Canadian magazine, just after Credit Suisse released their report.

RampRate says that Google does not seem interested in setting the record straight about YouTube’s actual losses. They believe that the enormously high loss perception by analysts helps Google negotiate more favorable contracts with movie, TV and music studios. Copyright owners tend to be less likely to pursue legal options to receive unpaid royalties and damages if they believe YouTube is a debt maker. “Google is no doubt thrilled to let YouTube be known as a financial folly,” RampRate said in their recent report.

YouTube spokesman Aaron Zamost said that Google has been running advertisements around millions of user created videos to lessen YouTube’s losses, though he would not actually comment on RampRate’s report. He also said YouTube shares revenue with its business partners, giving Google little reason to purposefully allow YouTube’s losses to be magnified. “We want our partners to do well, because when they succeed, we succeed,” Zamost said.

The real question is how much it costs Google to run YouTube. 20 hours of video are supported by Google every minute, requiring high numbers of bandwidth and storage space. Credit Suisse, after lots of research and interviews, believes operation costs to be as high as $380 million. RampRate believes it is only $83 million, believing that Google has negotiated lower costs with broadband providers and data movers. RampRate also believes Google has helped keep down YouTube’s costs with their own innovative technology, an idea that Pichette supported when he spoke with Mclean magazine. “When people run models, they generally use standard industry pricing for bandwidth, storage, but we build everything from scratch,” Pichette said in the interview. “So we know our cost position but nobody else does.”

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Tags: pichette, chris crocker, internet economics

Is this ad a bit too insensitive?

Jennifer McClelland | RSS | Mon, Jan 19 2009 | 0 Comments

Monster, the online job hunting website, is launching a string of new ads about people who are in the wrong job field.

One of the ads features a man clinging to steel beams. It looks like if he lets go, he will plummet to his death, and he knows it. However, when the camera backs out a bit, you see he’s only a few feet off the ground.

That ad would be more funny, to me and possibly to others, if right now people had the opportunity to change where they wanted to work or the field they wanted to work in. Construction is one of the fields that is hemorrhaging jobs right now too.

The video can be seen here

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Tags: website, youtube, death

Rep. Barney Frank isn’t so happy about Obama picking Rick Warren

Jennifer McClelland | RSS | Mon, Dec 22 2008 | 0 Comments

Rick Warren is an evangelical pastor that wrote the best selling book “The Purpose Driven Life.” He is the senior pastor and founder of the fourth largest church in the country. He is also opposed to gay marriage and is a pro-lifer.

President-elect Obama picked Warren to give the invocation at his inauguration ceremony on January 20, 2009. It really made a lot of pro-choice and gay rights supporters angry. One of those is openly gay Representative Barney Frank of Mass.

Frank said, “If he was inviting the Rev. Warren to participate in a forum and to make a speech, that would be a good thing, but being singled out to give the prayer at the inauguration is a high honor. It has traditionally given as a mark of great respect. And, yes, I think it was wrong to single him out for this mark of respect.”

Rick Warren was a very poor choice in my opinion also. His church and he have given so many statements about homosexuality, including banning gay people from membership at his church, he is just too controversial.

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Tags: barney frank, youtube, obama