Oh right, The man from Planet Goon thinks that advertisement driven television doesn't feature the same lewd and ridiculous crap that's found on youtube. Uh huh. Riiiiiiiiight.

Sorry, stranger. I haven't surfed over ten million hours of "Cops", "America's Funniest Home Videos" and various versions of "Candid Camera" to believe that advertisers shun clips of people being tackled in dago-t's, kicked in the nuts or falling into wedding cakes. There is undoubtedly a problem with the business model, but it cannot possibly be the content.

You know, it just could be, just might be, that there's a Depression on-- why do I feel compelled to capitalize it (no pun intended)? It could be that advertising revenues are down because retail sales are down, credit is too expensive and people aren't clicking on ads to buy crap because, well, nobody has any fucking money left to buy crap.

So, I guess my thesis is not that Youtube is impossible for generating ad revenue because of its content. It's impossible to generate ad revenue because most of the shit they sell with those kinds of ads just isn't worth buying.

Stick around Earth a bit longer, especially here in the Good ol' U.S. of Ass, and you'll see what I mean.

Are you under the impression that Cops, Candid Camera and America's Funniest Home Videos are billion-dollar ad-revenue-generators, capable of supporting $700 per year in expenses?

Nobody's saying there isn't some money in such ads. The question is whether there's enough to justify the expense of the service.

I meant $700 million per year.

On the other hand, those shows do have editors and producers. And a scheduled air time, with major networks backing them.

So even if advertising does become legitimate on user-generated content, what happens when the users want their fair share?

What's the user's fair share when the company is providing hosting services for free?

If they users want a "fair share" then they're looking in the wrong place by going to Youtube in the first place. It's not like they were told that they'd get paid for that Naruto montage they sat to "We Didn't Start the Fire."

That's the price you pay for not being filtered. Anyone can create and publish their serial drama, book, musical album, etc., because of the internet, but that doesn't mean that suddenly there are more works worth publishing. Those that are, and can make money will be taken on and marketed whereas the drunk college students singing karaoke will languish at the bottom.

Alvarus:

What's the user's fair share when the company is providing hosting services for free?

Any part of an actual profit. Hosting for free is nice, but so is not paying for content. As for actual percentages, I don't really know to be honest, but its something that should be worked out.

And as for the "Naruto montage thing" well, that is a different story. I'm more referring to the "Christian the Lion" and "chocolate rain" type of content.

Colage:

If they users want a "fair share" then they're looking in the wrong place by going to Youtube in the first place. It's not like they were told that they'd get paid for that Naruto montage they sat to "We Didn't Start the Fire."

That's the price you pay for not being filtered. Anyone can create and publish their serial drama, book, musical album, etc., because of the internet, but that doesn't mean that suddenly there are more works worth publishing. Those that are, and can make money will be taken on and marketed whereas the drunk college students singing karaoke will languish at the bottom.

To expound a bit more, I think there has to be a threshold for number of hits for an original piece of content for ONLY that piece of content to trigger an advertisement being placed on it, and probably a higher number before the user got a kickback.

Farhad Manjoo:

Are you under the impression that Cops, Candid Camera and America's Funniest Home Videos are billion-dollar ad-revenue-generators, capable of supporting $700 per year in expenses? Nobody's saying there isn't some money in such ads. The question is whether there's enough to justify the expense of the service.

I am under the impression that 90% of the total content of television and 80% of print media is no better or different than the user generated crap that's provided through Youtube. It's all train wrecks and tits-- crap people will lift their heads out of the feeding trough for 15 seconds to look at.

It is therefore not a problem stemming from the content, doofus. Your premise is patently absurd and leaves out substantial other causalities and circumstances. It is a problem that stems from probably three things: mispricing of the licensing for "creative content"; what is probably some anti-competitive form of modern trusts which unreasonably elevates the costs of bandwidth; and finally, the recent disastrous contraction of disposable income.

All ad revenue is down because disposable income is down and most of what is advertised cannot sell in this environment, like it did five or even two years ago. Look at what TV is living off of in terms of revenue right now-- bankruptcy attorneys, glorified pawn shops, and work at home scams. You see a lot of consumer products moving around these days? I don't. I see a lot of truck beds stacked five high around the train yards.

The rest of the problem, in fact most of it, are unrealistic costs associated with bandwidth and licensing of NON-user generated content.

To wit:

But the cost of bandwidth, content licensing, ad-revenue shares, hardware storage, sales and marketing and other expenses will total about $711 million, putting YouTube squarely in the red, the Credit Suisse report estimated. Bandwidth accounts for about 51% of expenses -- with a run rate of $1 million per day -- with content licensing accounting for 36%.

87% of the operating costs are bandwidth and licensing. That's over $600 M of the total expenditures that Google has to recoup through advertising. Licensing costs are the exact opposite of the user generated free content. In fact, one might argue that the reason ABC and Disney and the rest of those aholes latched onto Youtube was because they knew that user generated content was creating a huge market of viewership that spilled over into their licensed content-- the way McDonald's keeps their big sandwich prices low so they can make a killing selling Coke. Your source article says that the YTube will generate 75 BILLION video streams this year alone. You've got to be an idiot to conclude that the profitability problem is content.

It's not the phone cams of squirrels causing the excessive operational costs other than by generating the traffic that is the very basis for calculating and earning ad revenue. If nobody looked at that shit, then I could understand why no one would advertise, but then the bandwidth costs would be minimal.

So what's with the bandwidth costs? That's what you should be exploring. I don't know how bandwidth gets priced as it does, maybe you do. But if these figures are right, then somehow, for the first time since the start of the industrial age, there is no economy of scale with respect to the most important and pervasive major tech innovation since TV. The more they stream, the more it costs and the worst the revenue to expense ratio? What are they making fiber optic cable out of these days? Caviar? You can get content through cable, phone lines and wireless transmission, mostly built by companies put out of business by their investment in bandwidth overcapacity. So why does it cost a million dollars a day? Does Comcast or ATT pay that much to stream cable programming? Are they generating 75 billion views each year?

Something is wrong with this picture, and it doesn't have jack shit to do with the nature of the content. If people click, it's all a matter of percentages and statistics as to how much the bandwith time is worth to advertisers.

It would seem to me that in an economy that has lost an estimate $11-17 TRILLION in purchasing power within the space of eighteen months is going to result in a severe ratcheting down in the ratio of circulation (either editions sold or clicks on sites) to sales generated by ads contained there. If we woke up tomorrow and found an extra $11 billion laying around to spend, I think the ad revenues for a crazy squirrel station that garners 75 billion streams would be substantially higher than they are now.

Well now, let's break it down.

Credit Suisse projected YouTube will serve 75 billion video streams in 2009, up 38% compared with last year.

Farhad Manjoo:

Are you under the impression that Cops, Candid Camera and America's Funniest Home Videos are billion-dollar ad-revenue-generators, capable of supporting $700 per year in expenses? Nobody's saying there isn't some money in such ads. The question is whether there's enough to justify the expense of the service.

Oh, and let me be fair enough to laud the fact that you addressed my rant. Would the rest of the Slate (Saletan notwithstanding) be as accessible as you.

djyman15:

And as for the "Naruto montage thing" well, that is a different story. I'm more referring to the "Christian the Lion" and "chocolate rain" type of content.

Right, but the people in both of those examples benefited from the exposure they gained because of Youtube. Same goes for most of the 10,000,000+ views club. In those cases, there is a mutually beneficial relationship: Youtube gets the traffic driven by these personalities, and the personalities in turn get a platform for self-promotion.

If they expect any compensation from Youtube (and as far as I know, none of the significant 'celebrities' have come forward demanding as much), then they should also consider cutting Youtube in on the revenues made from their book/advertisement deals.

"All ad revenue is down because disposable income is down and most of what is advertised cannot sell in this environment, like it did five or even two years ago. Look at what TV is living off of in terms of revenue right now-- bankruptcy attorneys, glorified pawn shops, and work at home scams. You see a lot of consumer products moving around these days? I don't. I see a lot of truck beds stacked five high around the train yards."

I didn't say YouTube's ad revenue was down. It's not. It's up (see links in the piece). That's the problem: It's never made a profit, even during the boom. Its troubles aren't recent; they're inherent to the medium.

That's why Hulu is doing better than YouTube even though they're both -- obviously -- operating in the same ad market.

Farhad Manjoo:

"All ad revenue is down because disposable income is down and most of what is advertised cannot sell in this environment, like it did five or even two years ago. Look at what TV is living off of in terms of revenue right now-- bankruptcy attorneys, glorified pawn shops, and work at home scams. You see a lot of consumer products moving around these days? I don't. I see a lot of truck beds stacked five high around the train yards." I didn't say YouTube's ad revenue was down. It's not. It's up (see links in the piece). That's the problem: It's never made a profit, even during the boom. Its troubles aren't recent; they're inherent to the medium. That's why Hulu is doing better than YouTube even though they're both -- obviously -- operating in the same ad market.

I've only recently checked out Hulu, so I'm not clear on how it is the same or different than what's on Youtube (I was just trying to show my daughter an example of the late great Phil Hartman's "Unfrozen Caveman Lawyer"-- for purely scholarly purposes, of course-- but of course, they've all been refrozen by the IP Ice Age)

so when you say, "inherent to the medium" aren't you just reiterating that it's a matter of high bandwidth costs rather than content? If your thesis was correct, then YTube would ditch the crap you say advertisers won't sponsor and just put up the shit they do sponsor- which would A: substantially reduce the number of views; and, B: substantially increase the licensing costs. Or, rather, sites that trafficked only in licensed material that is ad supported on TV raking in proportionate revenues on the site.

I don't know. Having been raised in a free TV world only to grow up into a $45 a month cable bill world for essentially the same amount of "entertainment", this just seems another feature of the old "rent seeking" behavior where it's only about getting a gov't license to steal. They take what's free and then after generating sufficient interest, figure out a way to attach a viewer cost to it because they have legal control over distribution. Like any other seller of addictive substances.

Colage:

djyman15:

And as for the "Naruto montage thing" well, that is a different story. I'm more referring to the "Christian the Lion" and "chocolate rain" type of content.

Right, but the people in both of those examples benefited from the exposure they gained because of Youtube. Same goes for most of the 10,000,000+ views club. In those cases, there is a mutually beneficial relationship: Youtube gets the traffic driven by these personalities, and the personalities in turn get a platform for self-promotion.

If they expect any compensation from Youtube (and as far as I know, none of the significant 'celebrities' have come forward demanding as much), then they should also consider cutting Youtube in on the revenues made from their book/advertisement deals.

Haha! I get what you're saying, and it seems like a fair deal to me. I doubt we'll be seeing a lot of book/ad deals though.

doodahman:

Farhad Manjoo:

"All ad revenue is down because disposable income is down and most of what is advertised cannot sell in this environment, like it did five or even two years ago. Look at what TV is living off of in terms of revenue right now-- bankruptcy attorneys, glorified pawn shops, and work at home scams. You see a lot of consumer products moving around these days? I don't. I see a lot of truck beds stacked five high around the train yards." I didn't say YouTube's ad revenue was down. It's not. It's up (see links in the piece). That's the problem: It's never made a profit, even during the boom. Its troubles aren't recent; they're inherent to the medium. That's why Hulu is doing better than YouTube even though they're both -- obviously -- operating in the same ad market.

I've only recently checked out Hulu, so I'm not clear on how it is the same or different than what's on Youtube (I was just trying to show my daughter an example of the late great Phil Hartman's "Unfrozen Caveman Lawyer"-- for purely scholarly purposes, of course-- but of course, they've all been refrozen by the IP Ice Age)

so when you say, "inherent to the medium" aren't you just reiterating that it's a matter of high bandwidth costs rather than content? If your thesis was correct, then YTube would ditch the crap you say advertisers won't sponsor and just put up the shit they do sponsor- which would A: substantially reduce the number of views; and, B: substantially increase the licensing costs. Or, rather, sites that trafficked only in licensed material that is ad supported on TV raking in proportionate revenues on the site.

I don't know. Having been raised in a free TV world only to grow up into a $45 a month cable bill world for essentially the same amount of "entertainment", this just seems another feature of the old "rent seeking" behavior where it's only about getting a gov't license to steal. They take what's free and then after generating sufficient interest, figure out a way to attach a viewer cost to it because they have legal control over distribution. Like any other seller of addictive substances.

Hulu plays popular shows (It's a Fox and NBC joint venture I believe) and older movies. They stick 30 second ads in at certain points. So it's like a YouTube for production-generated content, and the legitimate advertising. It's basically TV on demand.

So what you said about YouTube ditching the stupid, unwatched user stuff basically. It looks like it actually will work, which is something you can't say about a lot of stuff on the web these days.