

Google Is Saved! YouTube Money Machine Mints $1 CPMs - twampss
http://www.alleyinsider.com/2008/4/google_s_youtube_money_machine_1_75_cpms

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volida
that seems to be on purpose because of the potential of violating copyright or
until they find a good way to generate more money or until YouTube grows so
big that will be an unevitable source for video (oh yes it's already that)

no revenue, no money to pay them in case you get sued.

which is why YouTube LLC still exists independently.

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marcus
Unfortunately the estimated cost for the infrastructure was about 1$CPM

[http://www.techcrunch.com/2006/04/30/did-youtube-just-
raise-...](http://www.techcrunch.com/2006/04/30/did-youtube-just-raise-
another-25-million/) 35M daily videos watched = 1000M monthly videos watched
monthly infrastructure cost was estimated to be 1M USD

Which means at 1$ CPM you are barely breaking even. And that is without any
revenue sharing costs.

Perhaps Google had better economy of scale but I doubt its an order of
magnitude better.

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brlewis
In 2008, I'm impressed with any online video company barely breaking even. I
figure today's ventures are just attempts to build a brand in anticipation of
when costs come down and profitability is realistic.

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marcus
I just reran the numbers a bit through S3 calculator and came up with 780K per
month at that traffic level, so costs are already dropping but still not a
very big profit margin, and that is assuming you can put ads on all your
videos and you get to keep the entire 1$ CPM.

And if someone puts any ads on my family birthday videos I'll be irked.

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cstejerean
I assume Google can do this cheaper than your S3 calculations. Amazon still
needs to make a profit on the hosting so I assume their actual cost of
providing the service is much lower. I'm not sure exactly how much lower since
I don't know Amazon's margins. Anyone care to take a guess?

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marcus
Not entirely sure Amazon makes a profit on S3. They might be offering it at a
price lower than cost too, to establish themselves trusting costs to go down.

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mattmaroon
Or profiting from the storage and selling bandwidth at or near cost.

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mrtron
Various Facebook ad neworks offer CPMs in the range of about 1-10 cents.

Now, you aren't dealing with nearly the bandwidth costs...

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willz
I think people got this all wrong.

The money-making potential of videos should be compared with televisions, not
clicks.

One hour of YouTube time should eventually make about the same amount of money
than one hour of TV, that's the future and that's its potential. The cost, of
course, will be lower.

To achieve this, YouTube may need enterprise sales etc. But these are just
means, the primary goal is still to get people spend time on online video.

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allertonm
How is the cost lower, for comparable quality content? It seems to me that
YouTube has higher costs per viewer than conventional TV, and that production
quality must be at least as good as regular TV to attract the same ad revenue.

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SwellJoe
I have to agree here on cost...broadcast television effectively gets its
bandwidth for free. Then again, with peering deals, Google is probably getting
it for pretty close to free.

What changes is the competitive landscape--when there are a billion videos to
choose from, as opposed to 20 or 50 or even 100 found on broadcast or cable or
satellite, the eyeballs on any one drop. Obviously the aggregator is the
natural place to sell the ads (bully for Google), but the ability to focus
efforts on "blockbuster" shows is a bit different. I worked in television for
several years right out of college, and blockbusters are a major part of the
operating budget of a TV station because it's a limited commodity--if you want
to advertise during Lost, you've only got one company to buy from and there's
only a couple dozen slots for sale. Cheaper spots are actually often more
effective (since you can run them a lot more and get a single viewer to see
your ad multiple times), but there's still magical thinking in TV advertising
and advertisers like to reach the blockbuster audience. When the blockbuster
no longer exists (as seems likely in a future of a billion+ possible videos),
monetization will shake out differently. But advertising isn't going away, so
something will happen and it'll all work out somehow.

