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[qi:_newteevee] YouTube is much closer to breaking even than widely thought, says a firm with intimate knowledge of global infrastructure costs. A widely publicized Credit Suisse report that said Google would lose $470 million on the site this year neglected to account for factors such as […]

[qi:_newteevee] YouTube is much closer to breaking even than widely thought, says a firm with intimate knowledge of global infrastructure costs. A widely publicized Credit Suisse report that said Google would lose $470 million on the site this year neglected to account for factors such as peering traffic, wholesale bandwidth deals and cheap data center locations. Where the bank said YouTube’s costs will amount to $711 million in 2009, RampRate, a San Francisco-based company that advises large companies on IT infrastructure, says the actual cost is $415 million.

YouTube - RampRate vs Credit SuisseGiven Credit Suisse’s revenue estimate for YouTube, that would give the site an operating loss of $174 million this year. If you use other people’s revenue numbers — for instance, Jefferies said $500 million — the site would actually turn a profit.

  1. If you use other people’s revenue numbers — for instance, Jefferies said $500 million — the site would actually turn a profit.

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  2. Ben (CEO Fliqz) offers a much more thoughtful take on what drives these numbers….
    http://www.businessinsider.com/is-youtube-doomed-2009-4
    and
    http://adage.com/mediaworks/article?article_id=137307

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  3. The biggest difference between the two analysis is the bandwidth cost. Credit Suisse estimate is almost ten fold more than RampRate. The truth is somewhere in between. From my own experience at binfire.com, $48.7M annual cost for bandwidth for a site like youtube seems way too low!even if they use Google clout to negotiate for better terms.

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  4. The biggest difference between the two analysis is the bandwidth cost. Credit Suisse estimate is almost ten fold more than RampRate. The truth is somewhere in between. From my own experience at binfire.com, $48.7M annual cost for bandwidth for a site like youtube seems way too low!even if they use Google clout to negotiate for better terms.
    BTW I love your blog!

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  5. [...] mentre YouTube aggiunge Wonder Wheel, la stessa funzioen di Google News, gira un report riguardo i costi dell’infrastruttura di YouTube che sarebbero un po’ [...]

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  6. either way, google’s acquistion of youtube really stalled online video monetization. they dont innovate but shove the same old overlays. and nobody else can, since there is very few players left.

    prior to the acquisition fox had twice the market share as youtube. now it has a tenth. although the #2 player.

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  7. [...] most recently Youtube. Youtube which they paid $1.6 billion amount for and supposedly loses them 415 million a year despite being one of the top 10 visited websites in the [...]

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  8. [...] charging people? Probably because their cost structure is out of line. YouTube, thanks to Google, has its costs under control. Until News Corp. can deliver costs close to that Hulu can't compete. So they blame you instead. [...]

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