The Perils of Popularity

By Brad

TechCrunch wonders if one of the most popular websites in the world was sold too late:

There are a handful of industry-changing Web 2.0 names including MySpace, Facebook, YouTube, Twitter, and LinkedIn. But unlike those other Web 2.0 behemoths who have the luxury of waiting out revenue challenges as their user base surges and the economy recovers, YouTube’s runaway success meant extremely high bandwidth costs and legal worries early on. It’s one of the only companies in that list that should have sold early while the momentum was high.

Evidence: Nearly three years after the acquisition, the mighty Google still hasn’t figured out exactly how to monetize all those eyeballs either. Industry estimates say YouTube spends half a billion or more a year in bandwidth costs. That’s not to say it was a bad acquisition, particularly considering Google’s stock currency was tantamount to monopoly money back then. But you have to wonder, if YouTube were alive today, how much more would it have been forced to raise and at what terms?

The web has led to a flood of free content. But from newspapers to video sites like YouTube, the question remains: How do you make money?