Marc Cuban has lashed against Youtube, saying in essence their popularity is a result of:
- free hosting for all; and
- copyrighted content avalable for free.
I agree their business model is still not entirely clear, i.e. not clear how they gonna monetize all this traffic.
Some have raised the argument that MySpace was in a similar position and they got bought by Murdoch and recently struck a cool, billion-dollar deal with Google.
Here’s the bit about the economics of streaming that I found very interesting:
And one last time I will touch on the economics of streaming. Youtube streams to their user and allows the user to retain the file. But they are still streaming huge quantities of bandwidth. The thing about streamed media is that it doesnt get less expensive the more you stream. When you get into doing terabytes of streams per day, your cost per bit tends to go up as volume increases because of all the incremental overhead associated with delivery of that video. From servers to routers to people to software licenses to maintenance to backup and redundancy etc, etc. the costs ad up in a big way, Delivering video is a whole lot more expensive than delivery of text, but the CPMs for any advertising have to compete with people selling text based ads. Its going to be interesting to see how it all turns out.
I agree - lets see how it’s going to turn out.
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