YouTube still hasn't figured out a sustainable business model. Ad revenue is the objective, but
most of YouTube's content remains outside the category of "inventory." Credit Suisse analysts estimate that YouTube will bring in about $240 million in revenue in 2009, mostly provided by home page placement ads and in-video overlays and adjacencies.
Credit Suisse estimates that YouTube generates approximately $86.7 million a year on homepage placement ads, or about $7 million per month.
In-video ads and banner adjancencies contribute another $87 million, according to the analyst estimates. Sponsored videos ($37.1 million) and sponsored links ($30.1 million) also contribute to YouTube's revenues.
On the cost side, Credit Suisse estimates that Google spends $711 million in operating expenses related to YouTube. Those costs include bandwidth, content acquisition, partner revenue shares, site overhead, and storage.
The biggest expense for YouTube is bandwidth, as you might guess, as YouTube streams about five million videos a month. That costs YouTube about $360 million a year, or $1 million a day. Keep in mind that observers believe Google pays about half the the lowest "market" rate for
bandwidth.
And Google gradually is assuming some roles more analogous to a traditional network. Credit Suisse estimates that YouTube will pay $260 million in content acquisition costs in 2009.
And despite the estimation that YouTube buys its bandwidth at discounts as high as 50 percent of the lowest "market rates," bandwidth still is the biggest sunk cost.
General overhead represents about $24 million worth of 2009 cost. Storage costs $12.7 million a year.
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