Most of us love both Facebook and YouTube. It has become part of our daily consumption. Some are addicted to Facebook, some are to YouTube and some to both. Both of them have been category leaders with little competition. Yet, both seems to have the same problem — How to convert their traffic, the loyal visitors and their brand into actual revenues for their shareholders.
The Facebook success and the challenges have been discussed here at length. YouTube has changed the face of entertainment. It has created a complete new dimension in shared experience, made everyone a rich media content producer and consumer with just a few clicks. Yet a business model eludes YouTube.
A good 2.5 years have elapsed since Google acquired YouTube for a cool $1.65 billion. Google hasn’t taken any specific steps to monetize YouTube. It probably doesn’t need to, because its revenues (estimated at anything between $100-200 million) are insignificant . According to comscore, 100 million viewers watched over 5.9 billion videos in the U.S. alone in March 2009. It has 10 times the number of visitors as the next biggest site. Despite that, it has no advertising nor any model to charge for premium content. Yet to cater for the surging content library it has to make continuous investments in infrastructure in storage and bandwidth mainly estimated at $400 million. Well, Facebook is lucky because it has a rich daddy in Google who.
YouTube also faces new competition from Hulu — a joint venture of NBC and News Corporation which features NBC and Fox TV shows and others. Currently YouTube is also trying to get premium content and signed up deals with Sony, MGM and others. It also proposes to charge payment for premium content. Will it be successful?
The conditions at Facebook and YouTube begets an important question — They have successfully challenged tradition and created new categories. They have also been terrific success.
But when will they show us the money?