Google is losing as much as $1.65 million a day on the Web’s most popular video site, according to calculations and analysis from Internet Evolution.
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Editor in Chief Terry Sweeney, citing the estimated $513 million to $663 million in annual YouTube losses divided by its 375 million unique visitors. The report, written by David Silversmith, drew from a variety of sources, including Bear Stearns, comScore, Credit Suisse, and Google itself.
“Google is, in effect, paying YouTube consumers to visit the site, despite premium offers and other revenue-generating programs that can’t keep pace with the site’s expenses — content acquisition, bandwidth, and storage, to name a few,” Sweeney said.
How long Google expects to continue subsidizing the site or when it expects to break even is less clear.
Google’s plans to serve up advertising on YouTube have had limited success.
YouTube sells homepage roadblock ads that cost $175,000 per day and branded channels at $200,000 apiece; neither has been widely deployed, according to the Internet Evolution report.
“The average visitor to YouTube costs Google between one and two dollars,” said Internet Evolution.
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