A week ago, Google bought YouTube for $1.65 Billion. Even though cash would be better than the all-stock deal, that is still a lot of cheeseburgers. YouTube currently holds around 40% market share of online video. That may be a lot of eyeballs for GoogleAds, but I still dont know how YouTube or any other free video site makes money. The costs of storing and serving 100,000 videos a day has to be astronomical. YouTube itself said it was “exploring” advertising and other ways to profit, but basically their buisness strategy was to keep burning through Venture Capitalitst money until payday hit (which luckily for them it did).
I have used YouTube and GoogleVideo because both have their good points:
- YouTube is a ton of fun to explore. They give you real-time detailed statistics of your videos and great community features that make it almost a full fledged social networking site like myspace. Searching works well, and the site loads fast even with all the extra fluff.
- Google is known for delivering fast amounts of data quickly and efficiently. It shows in GoogleVideo. There is no fluff. There are no community features and good luck searching for a specific video. GoogleVideo allows you to upload a video of any size and length (YouTube only allows 10 minutes or 100 megabytes). So GoogleVideo is great for linking to your video from your own website. The Google video player also lets you skip to any point in the video even before it loads.
So these services are great, but, unless they switch to a pay-subscription model soon, I dont think they will be around for much longer. This happend to photosites in the past. For example, Google has no limit for videos but they only allow 250MB for photos. It is true that they compress the video down, but it is still a lot of data. I guess online video is too new for reality to hit (YouTube and GoogleVideo are barely two years old).
I am working on a photo-sharing site (I will post about it soon). It is unlike other sites, so it may have a chance to get noticed. My goal is to keep it free to use, but still generate some money by selling special features and/or unconventional advertising. Big companies only seem to care about market share, but if I can keep it self-sustained and my customers happy, thats all that I really care about. And you never know, if it catches on, maybe Google will be knocking on my door?
Google Press Center: Press Release