Think about YouTube for a second. They offer unlimited hosting for videos at 8K resolution. Not only that but they’ll re-encode your video in several different resolutions, compress them down to a reasonable streamable size and then they’ll send those 12 different copies to 15 data centers around the globe. Not just that, they’ll then reencode your videos to the latest tech (like 60 fps playback). All for free.
Then see that YouTube deals with 300 hours of video uploaded every single minute of every single day. A smarter person than me did the back of the envelope calculations on this and found that YouTube would use up 128,468 terabytes of storage a year (assuming 1080p), and that’s without calculating the levels of redundancy that Google has.
This is why YouTube won’t be going away any time soon. YouTube is essentially a hosting company offering unlimited video storage.
It was never always like this though.
Video hosting before YouTube
It’s hard to believe that only around a decade ago, that YouTube as a model today didn’t exist. Your choices for online video was to go to places like eBaumsWorld, who were the gatekeepers in choosing exactly the videos which would appear on their site.
‘uTube’
By 2006, YouTube had raised $11.5 million in VC funding at the time, but at 200Tb a day in data, bandwidth cost had reached an outrageous $2 million a month.
I still remember the loud howls of mockery when Google paid $1.65 billion for YouTube in 2006. Mark Cuban said: “Only a moron would buy YouTube”
But from the start and throughout, YouTube has made almost no money. One of it’s own founders said that it would be hard to imagine YouTube operating today had Google not bought it in 2006.
“But while YouTube accounted for about 6% of Google’s overall sales last year, it didn’t contribute to earnings. After paying for content, and the equipment to deliver speedy videos, YouTube’s bottom line is “roughly break-even,” according to a person with knowledge of the figure. Google bought YouTube in 2006 for $1.65 billion, but generated little revenue in the early years”
Competition?
No scrappy startup can realistically compete with Google’s engineering prowess. Vidme was renting server space from AWS (Amazon) which price compared per terabyte to Google would’ve been a complete joke. There needs to be a tech giant who has money to burn that wants to compete with YouTube for there to be competition.
P2P is not the answer. It may work for the 1% (popular videos), but for the 99% it does not provide a viable alternative for on-demand content. Nobody wants to wait five hours for an old how-to video to stream from a single seed, with limited upload capacity. The idea itself has even been tried before with little luck.
Why Google owns YouTube
One word. Ads.
They’re in the business of collecting information on users — info about our interests and hobbies, our work, relationships — whatever. They then use this information to provide a platform for advertisers to effectively target users. The more info they have on you, the more effective the ads.
Just because YouTube may not be directly profitable doesn’t mean it has no value to it’s owner. But this only works when you have the holistic reach that Google does into our lives. It’s a data-mining operation that is unique to Google. No other tech company has a similar end to end control.
From email, to web browsers (Chrome), to some of the operating systems which those web browsers run on, and then to the web’s biggest ad platforms (AdSense, DoubleClick). Gmail, Chrome, Android, Docs, Drive, Maps… YouTube is just another part of the bigger picture for Google.
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On demonetization. Everyone watches YouTube, but that doesn’t suddenly turn Google into a public resource, nor should they be required to guarantee every video has advertisers on a platform that they themselves have lost billions of dollars on.
YouTube is here to stay whether you like it or not. If a multi-billion dollar organization with great marketers and programmers which specifically specializes in online services has not figured out how to make online video platforms profitable, then who will?
