How Much Is YouTube’s One Minute Worth?
There’s no doubt that YouTube is the biggest player in online video industry. YouTube outperformed its competitors and has become a winner in video sharing. YouTube is one of the most succesful web stories of all time, since 2006 and still growing very fast.
When Google acquired Youtube for $ 1.65 B, Google was criticized for paying huge amount of money for a website without a business model. Everybody except Google was thinking that YouTube was overvalued. Video sharing sites have the biggest costs in Internet World. They need really fast servers and huge storage space and the bandwith costs are the highest. Because of the high costs, ROI (return of investment) of online video businesses are very slow. It’s hard to monetize broadband video and the only ways to monetize this type of business are showing ads and subscription.
According to the YouTube Blog, YouTube’ s 1 minute is worth 20 hours. In mid-2007, 6 hours of video were uploaded to YouTube every minute and in January ‘09 it grew to 15 hours per minute. Now, 20 hours of video are uploaded to YouTube every minute and we’ll see 24 hours – a day’s worth of video uploaded to YouTube, very soon.
YouTube dominates the statistics of online video industry, but doesn’t make Google any money. YouTube streams more than 5 billions videos in a month but less than 5 percent of those videos have ads. YouTube serves one-third of all online videos. Industry experts predicts US Online Video Ad Spending as $ 750 M in 2009 and rising to $ 5.8 B in 2013. Undoubtedly, YouTube will get a big part of this pie if it’ll survive. YouTube’s operational costs are rising and bandwith costs are estimated about $ 470 M for this year alone. Day by day, it’s getting harder and more expensive for Google to support YouTube.
Hulu, a smaller and newer competitor of YouTube made a head-to-head US revenue (about $90 M) with YouTube. Hulu is focusing on exclusively on professional content and held by NBC Universal, News Corp and Disney which are also very important video producers for television. Hulu’s advantage is its professional content without copyright problems. But because of some copyright restricitons, Hulu is a U.S. only service. YouTube proves that there’s a big market for user-generated content but Hulu shows us that advertisers want to spend money for professional content.
* YouTube had more than 77 million unique visitors in April when Hulu had about 7 million unique visitors.
Industry experts estimate an average value of $15 CPM for video sites and $40 CPM for focused video sites like Hulu and Heavy.
Other video sites will never be able to grow as much as YouTube, but their revenue can surpass YouTube’s in the future. YouTube (and Google) must find a way to monetize its content effectively and reduce the costs. I think the only way to do is to serve more professional content as quickly as possible and find an innovative way to monetize user-generated content. Maybe, sharing the revenue gained from user-generated content with the users who created the content can increase the quality and the chance of the user-generated content to get ads.
It’s true that YouTube has mind blowing satistics and the third most popular website in the world. YouTube’s one minute is worth 20 hours; but we really wonder how much is YouTube’s one minute worth in US $?
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