Over the past few months there have been several attempts to quantify YouTube's business model, with very different results. The main point of contention has been simply "how much money do they lose?" Today, YouTube fought back on its Biz Blog with a myth-busting post, taking 5 points and addressing each with a few sentences. As inspiration they used MythBusters, the television program where two guys try to debunk urban myths by actually reproducing them. Did YouTube succeed?
If success meant busting the myths, I'd have to say no. To convince everyone that their business model is viable, there is no substitute for numbers. They did not provide any, just words and a few statistics. Take this one:
Myth 3: Traffic, growth, and uploads are bad for YouTube’s bottom line. There’s been a lot of speculation lately about how much it costs to run YouTube. With revenue estimates ranging from $120 million to $500 million, and costs on an equally large spectrum, it seems people can pick any number to fit any theory they have about our business. The truth is that all our infrastructure is built from scratch, which means models that use standard industry pricing are too high when it comes to bandwidth and similar costs. We are at a point where growth is definitely good for our bottom line, not bad.
Now I may disagree with some of the numbers put out by those estimates, but at least they were numbers. Someone put their ass on the line and made a real estimate. If you're really going to dispute those numbers, you're going to have to bring some of your own. Otherwise, you just fan the flames you claim to be trying to put out.
The whole point of MythBusters is that it is hands on, they they take the myth and really test it physically. What they don't do is write one paragraph of PR about how misguided the whole idea is and call it busted.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Financials · Internet Traffic · Video