YouTube (s GOOG) has long been lauded for its ability to support the long tail of user-generated content, enabling anyone to publish videos to its site. As its business has matured, however, it seems that the site is increasingly relying on producer partners to create and drive views of monetizable content. While that has been good for business, growing the overall percentage of video views that YouTube can make money from, it also means that a larger amount of YouTube’s so-called long-tail content is being ignored.
“So far we’ve already transcoded videos that make up 99% of views on the site or nearly 30% of all videos into WebM.”
In other words, only about 30 percent of video assets on YouTube make up almost all video views of the views on the site. Or, put another way: 70 percent of all YouTube videos are barely viewed at all.
Let’s put this into perspective: YouTube reached over 700 billion playbacks in 2010, according to its press stats page. If we believe that user behavior hasn’t changed dramatically in the past four months, that means that about 30 percent of its video assets contributed about 693 billion views last year, while the remaining 7 billion of its plays came from 70 percent of its video assets.
That’s a whole lot of waste, even for a business that prides itself on managing scale. YouTube touts 35 hours of video are uploaded every minute, and those videos are transcoded into a number of video formats to reach an ever-growing list of connected devices. Even for a company with the infrastructure that Google boasts, the cost of transcoding and storing that much content is bound to be massive. There’s also the case of private videos: While many assets uploaded to YouTube and public, there are also unlisted videos which aren’t necessarily meant to be viewed, and which the site can’t monetize.
This could be one reason why YouTube has yet to turn a profit. On Google’s first quarter earnings call, the company reported that YouTube revenues more than doubled in 2010, and according to one analyst, the site is expected to produce $1.3 billion in revenues this year. But despite that revenue growth, Google hasn’t given a timeline for the site reaching profitability.
For now, YouTube is stuck in a bit of a catch-22, with regards to supporting the massive infrastructure of unwatched — and unmonetizable videos. On the one hand, YouTube is increasingly leaning on its actual partners to drive video views and subsequent ad revenues. On the other hand, it depends on the openness of its site to help it identify and develop new potential partners.