The last few weeks have seen a rash of opinions being expressed over the ability of YouTube ever making money. The question remains whether the site is a money making machine in waiting or just a financial black hole for Google.
Google CEO Eric Schmidt has already admitted the problems the company faces in making any money from the site, no matter how many millions of page views it receives, and how large a proportion of Web video that the site accounts for.
Kill Or Cure?
This lead CNET’s Don Reisinger to ask the question that dared not be asked: whether Google should just cut their losses and kill the site, despite the pain of losing that $1.65 billion investment it ploughed in just two years ago.
Since then we have seen the debate rage on, and some movement on Google’s part to at least experiment with different ways to make some money from YouTube.
The Battle Of The Marks
Over on Silicon Alley Insider, a debate was sparked in the comments section by an article reporting research by Citi analyst Mark Mahaney which suggests Google could make as much as $500 million from the site next year. Web video entrepeneur Mark Cuban then had his say and things go a little tense.
Mahaney’s view is that with traffic at the level YouTube enjoys, the site cannot fail to make money. Whereas Cuban believes, and long has done, that a combination of bandwidth bills and the reams of unlicensed content on the site mean it’s never going to happen.
Cuban’s Views
Cuban states quite categorically that Google cannot legally place an ad anywhere near or around videos that they do not have licenses for, which is pretty much every single user-generated clip on the site. Take those pages out, and the traffic you are left is doesn’t add up to much.
He also touches on the new Screening Room feature, which allows independent film-makers to showcase their work on YouTube. While he sees this as a smart move, it isn’t going to add up to the millions Google needs to start generating.
Cuban then brings up the possibility that Apple could get involved by offering independent film-makers an easier and more profitable proposition on iTunes. But also states that Google could solve the problem by paying around $25 million a year to license content and truly become the Web destination for he independents.
Conclusions
While Mahaney does his best to argue back, and it’s worth reading the ongoing debate on the site, it is hard to argue with Cuban’s logic and understanding of the situation Google finds itself in.
Google seem to have bought YouTube with dollar signs flashing in its eyes but no clear vision of how to achieve a steady and reliable income from the site. Until that is figured out then YouTube’s future is clearly in doubt.
