

YouTube Myth Busting - alex_c
http://ytbizblog.blogspot.com/2009/07/youtube-myth-busting.html

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philwelch
"The world premiere of Joy Luck Club director Wayne Wang's film, "The Princess
of Nebraska," was viewed 165,000+ times during the first 48 hours -- the
equivalent of landing the 15th spot on Hollywood box office charts."

Yeah, if movie theaters were free and instead of you going to them, they came
to you. If there's an "equivalent" to 165,000 tickets on an opening weekend of
a Hollywood movie, it's probably closer to 165,000,000 page views. And that's
in how much revenue is generated--for the production company, a film playing
in an actual cinema would rake in more than a YouTube release of equivalent
revenue, because your local movie theater makes almost nothing on ticket sales
while YouTube probably makes a significant percentage of ad revenue. It's not
like YouTube can give all ad revenue to content creators and sell overpriced
popcorn and soda, after all.

~~~
TFrancis
I think that the benefits of price (free) and availability (theater comes to
you) are only likely to increase movies watched via YouTube. Once a movie does
have 165M page views in an opening weekend (and one will), which will be a
better measure of movie performance: the box office or Google?

~~~
Retric
That depends on the movie, harry potter pulled in _139.7M over its Wednesday-
to-Sunday debut period._ I don't see free with advertising adding enough
people to make close to that much money.

However, a movie like _clerks_ could be vary profitable online.

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jacquesm
I've been moderated straight into the ground for this previously, but google
does not nearly pay for bandwidth what you'd be quoted if you went shopping
for bandwidth.

At a 5G commit you're down to $4/Mbit, over that it gets quite a bit cheaper
still.

Youtube is consuming thousands of times that quantity.

(the 5Gbit/sec will serve out 10K streams @600Kbps)

Another good trick they pull is to cache videos that are requested frequently
in or very near to the colocation offered by the larger ISPs.

~~~
philjr
Yup, they peer at local internet exchanges (e.g. LINX in London - www.linx.net
/ INEX in Ireland - www.inex.ie), cache locally where they can (uk.youtube.com
/ ie.youtube.com are what you get redirected to periodically over here) and I
would imagine that this drastically reduces their "internet" bandwidth
consumption.

~~~
andyking
I use the O2 ISP and I often notice that if I stream a popular video from
YouTube (or anything from the BBC iPlayer) my browser will tell me it's
"transferring data from" an IP address which is in my ISP's own range. It must
be cheaper for them to cache popular content within the ISP system and send it
out that way.

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pj
_These myths are officially busted._

No they aren't. Myths are busted with science and testing and experimentation.
All this article did was contradict the myths. It did nothing to show the
truth or falseness of the claims.

If you are going to use something like the high quality show, Mythbusters, to
model your contradictions, you should learn something about science from the
show and actually prove whether or not your contradiction is true.

This post didn't even come close to doing that.

~~~
jerf
"It did nothing to show the truth or falseness of the claims."

This is a primary source. If YouTube says that more traffic makes YouTube more
money, nobody else is in a position to contradict them.

I believe that lying about that in public could have legal repercussions.

~~~
sunir
I'm with the parent poster. The myths are not busted until some hard facts
come out.

There are artful ways to say true things that make the reader jump to
conclusions that they intend, but are false.

For instance, by claiming that they are in a position that growth is good,
they make us think they are making profit per view, but that isn't what they
said. They could have any number of non-profitable reasons to like growth,
like strategic market share or building a huge content database.

Further, their refutation that advertisers are not afraid of YouTube may lead
some readers to conclude that 70% of Ad Age Top 100 Marketers are paying
YouTube directly, whereas many (most?) are not. They are either using YouTube
as part of a social media campaign or advertising within some user content
hosted on YouTube.

It's not clear at all what's happening on their balance sheet, so speculation
will continue. To what end, I don't know, but after "What is Twitter's
business model?", guessing how much money YouTube burns a year is the Valley's
favourite party game. ;)

~~~
jerf
"I'm with the parent poster. The myths are not busted until some hard facts
come out."

If you adopt this position, then even "hard facts" won't satisfy you, since,
again, they'd have to come from YouTube, a source you don't trust.

To be honest, that's the position I'm in; I don't trust them on this point,
though I don't particularly care, either. I quite carefully didn't say that
the claims are true in their most obvious form, merely that this is _as good
as it is going to get_ for now, and in particular, that there is no applicable
"science and testing and experimentation" to be done.

~~~
sunir
I would say we agree except to note that YouTube is owned by a public company,
so it may make substantial disclosures at a future time that are subject to
audit. That's not exactly the same thing as taking its word for it.

------
100k
I like this one:

"Myth 5: YouTube is only monetizing 3-5% of the site. This oft-cited statistic
is old and wrong, and continues to raise much speculation. In our view, the
percentage is far less important than the total number of monetized views..."

They say it's old and wrong, but don't give the real percent, and spin in
terms of "total number of monetized views". Based on this answer I'd guess the
percent of monetized views isn't much higher than the "myth", otherwise they'd
have a better spin.

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jimmybot
What I'm curious about is why they bothered to do the myth busting. What's the
motivation to do this?

If everyone thinks even the mighty Google can't get YouTube to break even,
then no one else will try to compete with them in video, and when they get
around to figuring out how to make money, they will own the entire whole short
video market.

Meanwhile, Google overall remains a desirable place to work in the eyes of
many engineers. And Youtube advertisers care about how effective their ads are
relative to what it's costing them, not whether or not Google is making money
from Youtube. There may be some concern over the long-term availability of
Youtube as an advertising channel if it's not making money, but do you need to
think about that when you need to run an ad campaign right now?

So I mean, I don't really believe all the spin either, but why tell anyone
else otherwise? They don't certainly aren't out to raise funding either...

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alex_c
Fairly short post, the interesting bit:

 _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._

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app
How is bandwidth pricing built from scratch? You're transferring bits like
everyone else. Sure you might be doing it CHEAPER, but they didn't rewrite the
rules to peering.

These myths aren't "busted," they just refuted reported numbers with "that
ain't true!"

~~~
timdorr
It very well may be different, since Google bought a ton of dark fiber a few
years back. They may be running their own network over to whomever wants to
peer with them (Read: everyone!). They can get away with free bandwidth
because a lot of providers will let them connect for free if they're able to
bring the bits directly to their network, not via transit with some other
provider that's costing both sides money.

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amadiver
With awesome hits like "Worlds Apart", "CHIC.TV Models", and "Spin Cycle", it
won't be long before I ditch the old cable box for YouTube!*

*Just kidding YouTube. I love you, and I know you'll get better stuff than old "Starsky and Hutch" episodes any day now.

~~~
pmorici
YouTubes current obstacle to getting better content is going to be Hulu which
a large number of major content providers have a monetary interest in.

~~~
shrikant
YouTube can then look at taking content to international markets (as opposed
to the U.S-only Hulu), which make up a fairly decent chunk of their
viewership..

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jgamman
most of the stuff doesn't play for me in NZ so we're still a ways from upload-
once-play-anywhere

