This argument only makes sense if you believe Google's ability to generate money from YouTube will actually get worse as YouTube becomes more popular.
Why? Because bandwidth is getting cheaper. It won't be long before running YouTube costs half as much per visitor as it does today, so even if their cash potential per visitor stays the same, they will eventually break even.
On top of this, Google has some of the lowest bandwidth costs on Earth. They have massive peering and lots of their own wires; to suppose that they pay anything near what a startup video company would pay for bandwidth is ludicrous. But if you want to make YouTube look unsustainable, it helps to subtract a profitable network business from the bottom line.
Yes, YouTube might cost a lot for a few years, but if it retains its dominance for another three to five years, it will become ridiculously profitable.
Why? Because bandwidth is getting cheaper. It won't be long before running YouTube costs half as much per visitor as it does today, so even if their cash potential per visitor stays the same, they will eventually break even.
On top of this, Google has some of the lowest bandwidth costs on Earth. They have massive peering and lots of their own wires; to suppose that they pay anything near what a startup video company would pay for bandwidth is ludicrous. But if you want to make YouTube look unsustainable, it helps to subtract a profitable network business from the bottom line.
Yes, YouTube might cost a lot for a few years, but if it retains its dominance for another three to five years, it will become ridiculously profitable.