YouTube and Bandwidth 'Myths'
July 21st, 2009 By: Rich Miller
Google’s YouTube team this week decided to address the frequent speculation about the video site’s profitability and infrastructure costs. On the YouTube Biz Blog, Chris Dale and Aaron Zamost adopted a “MythBusters” theme to assert that the speculation is off base. In the process, they addressed (sort of) the estimates of YouTube’s bandwidth expenses. Earlier this year Credit Suisse estimated that YouTube was losing as much as $470 million a year, while RampRate pegged the annual red ink at $174 million.
“It seems people can pick any number to fit any theory they have about our business,” the YouTubers write. “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.”
Dan Rayburn suspects the company is “tired of analysts trying to figure out their costs and one has to wonder if this is the start of Google trying to fight back.” Dan says they’ll fare better if they fight back with data. “Without facts and numbers as compared to the rest of their business, the few data points they gave out don’t provide enough details to debunk anything,” he writes, examining each of the five points addressed by YouTube. And the discussion continues …