YouTube's Coming of Age

It’s hard to imagine a business able to lose ~ $500 million a year without any apparent concern, unless of course it is owned by the richest company in the world, Google.

But, of course, that is exactly the case for YouTube.

Here is my perspective: I’ve been working inside and with media start-ups in one capacity or another since 1971. Since 1995, these have mainly been online ventures. In our old media start-ups, as long as we could achieve a certain scale, there was really no doubt that we would be successful. The math made sense.

In new media, it has also seemed to be an article of faith among many that as long as we can grow ourselves to a supersized state, a la YouTube, some sort of successful business model will naturally follow. But tonight, my colleague Cathy Taylor is questioning whether this is true, at least in the case of YouTube.

Still, there has been some good news for the popular video-sharing site lately. YouTube says it is selling ads against roughly 9% of its video views in the U.S., which is a 50 percent improvement over the past year. Plus, the company remains so much larger than its competitors that even a partial monetization would likely generate more revenue than any of the other companies will achieve for a long time to come.

So, for my part, I’m withholding judgment. YouTube has an enormous advantage over everyone else trying to move into this media space. Nevertheless, half a billion dollars truly is a hell of a lot of cash to burn in search of sustainability in any business sector, even when your daddy’s name is Google.