>Gross profit does not include the costs of selling advertising (10% of sales), marketing, product development (Hulu's platform), or management or administration salaries
Sorry, what? Is this some new definition of profit being used here?
Let's stick to calling revenue revenue, and profit profit.
That is the precise definition of gross profit: the revenue of one widget sale minus the "materials and labor" cost of producing one widget. Gross profit does not include fixed costs, backoffice costs, overhead, etc. You are thinking maybe of "net profit".
The difference is basically that if you have gross profits, you can get to 'net net' profit just by growing your market share. If you are not gross profitable, selling 10-cent apples for 8 cents, you are screwed no matter what your other costs are.
And you've just described why I hate the definition.
>The difference is basically that if you have gross profits, you can get to 'net net' profit just by growing your market share.
How many more companies must flounder under this logic. I know it makes sense, but in reality, "gross profit" is just a way of making a situation appear better than it is.
Profit is the difference between all revenue and all costs. There are many variables than can be adjusted on either side of the equation.
To throw out a few costs, and they recalculate your "profit margins" is like calculating the inflation rate without using the cost of food and oil ~ fuzzy accounting, designed only to obscure in order to prove a stated position.
Well, not quite. Different measures of profit help you figure out which bits to concentrate on, just like having a good profiler helps you pinpoint bottlenecks.
In this particular case, showing that a company can get to gross profit streaming purely by web is valuable info -- it shows that the hoops Joost is going through to do P2P distribution may not be necessary. It also chips away at the assumption that pipe-owners have a natural advantage. I did some work in this area, and I had thought Hulu would get murdered by their bandwidth costs.
Different measures of profit help you figure out which bits to concentrate on,
My argument is that they almost always make bad situations look better, and in effect you end up ignoring core problems to focus on a much easier to believe "bit to concentrate on".
For me, as a founder, the best numbers are the ones that are the most difficult to beautify, since those will be the ones that are ultimately most accurate to the health of the overall business.
>Hulu has fewer than 1/10th as many users as YouTube and serves an even smaller fraction of streams, so that is entirely possible.
Hulu also markets to a completely different crowd. YouTube is user-generated content. Hulu is a user-focused service. That's not a hard dichotomy to perceive, so on that front alone it's pretty obvious to know that numbers will be different.
Sorry, what? Is this some new definition of profit being used here?
Let's stick to calling revenue revenue, and profit profit.