How YouTube could make $1.2B a Year • Hacker News Board

Re: How YouTube could make $1.2B a Year

#11

Post by hristov » Sat, Sep 12, 2009, 12:47 AM UTC

This is a classic example of the phenomenon that people have trouble understanding very large or very small numbers. Why would one percent of registered youtube users pay $10 per month for analytics?

The average registered youtube user is a random person that just watches the occasional video and had to get registered because on of the videos he wanted to see was adults only. The average registered youtuber does not give a flying f#$% about analytics of the random video he watches.

So would one percent pay for a monthly fee? Doubtful. I think the author thought they would simply because one percent is a very small number.

But it might be a good idea nevertheless. It is good idea from the business perspective as it is not likely to prevent people from using youtube in general. A person will usually first upload a video and then worry about who is watching it. So the fact that youtube charges for analytics is unlikely to prevent anyone from uploading videos.

So good idea, but it is very unlikely to bring in the enormous amount of money the author imagines.

Re: How YouTube could make $1.2B a Year

#12

Post by friendstock » Sat, Sep 12, 2009, 1:00 AM UTC

typo -- should be $1.2 B

Re: How YouTube could make $1.2B a Year

#13

Post by jporter » Sat, Sep 12, 2009, 1:57 AM UTC

DarrenMills wrote: post #2

I think he is a little too ambitious in terms of who would be willing to pay for data. For those people who admire their stats out of curiosity, I doubt many would cough up money for it, especially for more than a month or two. Only companies who use Youtube for marketing and distribution would actually NEED their statistics, in any respect. Although I suppose, nevertheless, there will be a small, small group of supe…

I agree also. Guy Kawasaki calls this the "Chinese Soda Myth" - If we can get 0.X% of the population to buy our soda then we'll make $XX million.

As a VC, he blames hearing this too often from startups as one of the reasons he has developed tinnitus :)

Re: How YouTube could make $1.2B a Year

#14

Post by stanleydrew » Sat, Sep 12, 2009, 2:51 AM UTC

byoung2 wrote: post #4

DarrenMills wrote: post #2

I think he is a little too ambitious in terms of who would be willing to pay for data. For those people who admire their stats out of curiosity, I doubt many would cough up money for it, especially for more than a month or two. Only companies who use Youtube for marketing and distribution would actually NEED their statistics, in any respect. Although I suppose, nevertheless, there will be a small, small group of supe…

I agree...I think users would be even less likely to pay for something that used to be free. Maybe they could get users to pay for more detailed analytics, such as a breakdown by time/date, location, or a list of other videos users had watched. But this data would only be useful to a small fraction of YouTube users.

I actually think you might have an easier time selling something that used to be free. In any case I certainly don't think users are less likely to buy something that was free. If it's free first, users have already seen it so they know what it's worth.

You're arguing that there's a set of people who would have been willing to pay for something had they not been given it for free first. But because it was free, all of a sudden they don't want it anymore once it costs money. I think that's a stretch.

Also consider joe video-uploader who had never thought of paying for something like analytics, but since he's been using it for free and knows how valuable it is to him he can make a better informed decision as to whether it's worth $10/mo or whatever.

Re: How YouTube could make $1.2B a Year

#15

Post by qeorge » Sat, Sep 12, 2009, 4:34 AM UTC

The author is missing some key knowledge about the industry. Selling analytics data could be a good fit for Twitter, but not for YouTube. Here's why:

1) YouTube's value is their user generated content. If the content goes, the site's value does too.

2) The highest-margin videos for YouTube are the most popular ones. These are often professionally produced and have distribution companies behind them. With UGC, the short tail subsidizes the long tail.

3) Professional video producers/distributors who consistently have popular videos already have sophisticated analytics software, often in house. They get their analytics data periodically and directly from Google, in a fairly raw format. Its way too much data to practically transfer through an API or web interface.

4) These users' financial incentive to produce the content is the revshare agreement they have with Google on the ads which run alongside their content. YouTube's volume currently makes them the best source of revenue for video makers.

So when you talk about selling* analytics data to the users, you're talking about selling a far inferior product for a paltry sum to a partner you already do orders of magnitude more commerce with each month.

Sure, you can argue that there might be regular folks who would be willing to pay for analytics data (that they're already getting free now), but I find that a bit naive. Either way, you don't want to waste your time trying to sell cheap software to small fish, and its definitely not worth $120B/yr.

*I'd be tempted to say extorting

Re: How YouTube could make $1.2B a Year

#16

Post by Tippingpoint » Sat, Sep 12, 2009, 10:55 AM UTC

blasdel wrote: post #7

Let’s assume that YouTube has 100MM registered users. Let’s say that only 1% of those users (1MM) would pay $10/month Why in the fuck do you think 1% of registered youtube users have even uploaded a video, much less original content?

Good point. How many users have actually uploaded video?

Re: How YouTube could make $1.2B a Year

#17

Post by Tippingpoint » Sat, Sep 12, 2009, 11:00 AM UTC

patio11 wrote: post #6

I think this gentleman has a radically different understanding of the proportion of businesses versus content leeches on Youtube than I do. Youtube has something on the order of 500 content consumers per 1 content uploader, and that probably overstates how many content creators are involved, because most users are just reposting things that they have copied. http://www.reuters.com/article/internetNews/idUSN1743638820…

This is a great point. Let's go backwards. There are somewhere around 50MM businesses in the united states alone...

How about if 1% of those have you tube accounts where they have added content. Does that make more sense?

Re: How YouTube could make $1.2B a Year

#18

Post by Tippingpoint » Sat, Sep 12, 2009, 11:01 AM UTC

jporter wrote: post #13

DarrenMills wrote: post #2

I think he is a little too ambitious in terms of who would be willing to pay for data. For those people who admire their stats out of curiosity, I doubt many would cough up money for it, especially for more than a month or two. Only companies who use Youtube for marketing and distribution would actually NEED their statistics, in any respect. Although I suppose, nevertheless, there will be a small, small group of supe…

I agree also. Guy Kawasaki calls this the "Chinese Soda Myth" - If we can get 0.X% of the population to buy our soda then we'll make $XX million. As a VC, he blames hearing this too often from startups as one of the reasons he has developed tinnitus :)

I love this quote! I'm really just trying to make a point. Access to analytic data is valuable.

Re: How YouTube could make $1.2B a Year

#19

Post by Tippingpoint » Sat, Sep 12, 2009, 11:02 AM UTC

stanleydrew wrote: post #14

byoung2 wrote: post #4

Earlier quoted context omitted.

I agree...I think users would be even less likely to pay for something that used to be free. Maybe they could get users to pay for more detailed analytics, such as a breakdown by time/date, location, or a list of other videos users had watched. But this data would only be useful to a small fraction of YouTube users.

I actually think you might have an easier time selling something that used to be free. In any case I certainly don't think users are less likely to buy something that was free. If it's free first, users have already seen it so they know what it's worth. You're arguing that there's a set of people who would have been willing to pay for something had they not been given it for free first. But because it was free, all o…

This is a great way to explain what I've seen happen. You have to set user's expectations that it's free now but not going to be free forever is fine...

Thanks for commenting.

Re: How YouTube could make $1.2B a Year

#20

Post by Tippingpoint » Sat, Sep 12, 2009, 11:04 AM UTC

hristov wrote: post #11

This is a classic example of the phenomenon that people have trouble understanding very large or very small numbers. Why would one percent of registered youtube users pay $10 per month for analytics? The average registered youtube user is a random person that just watches the occasional video and had to get registered because on of the videos he wanted to see was adults only. The average registered youtuber does not…

I think you're right. It might not bring in 120B, but it's revenue. Recurring revenue, that's more valuable and stable than ad revenue. Thanks.