YouTube's losses are unsustainable.

[Onkel Neal]

LINK: Do You Think Bandwidth Grows on Trees?

User-generated content may have changed the Internet, but sites like YouTube are suffocating under the costs of storing it.

Even though they've changed the way we live, sites that collect and share content produced by all of us haven't done the one thing many tech evangelists said they'd do—make a ton of money. Or, in many cases, any money.

Credit Suisse estimates that 375 million people around the world will play about 75 billion YouTube videos this year. To serve up all these streams, the company has to pay for a broadband connection capable of hurtling data at the equivalent of 30 million megabits-per-second—about 6 million times as fast as your home Internet connection. All this bandwidth costs Google $360 million a year, the analysts estimate.

YouTube isn't alone in Poor House 2.0. Yahoo bought the popular photo-sharing site Flickr in 2005, and though the service might be marginally profitable, it certainly hasn't added appreciably to Yahoo's bottom line. (Yahoo similarly doesn't break out Flickr's financials.) Facebook provides an even better example. The social network is running up a huge tab to store and serve up all the photos, videos, and other junk you stuff into your profile. Last year, TechCrunch reported that Facebook spends $1 million a month on electricity, $500,000 a month on bandwidth, and up to $2 million per week on new servers to keep up with its users' insatiable photo-uploading needs. (Members post nearly a billion photos every month.) But Facebook gets relatively little in return for storing all your memories. Ad rates on its network are terribly low, the company doesn't make a profit, and it hasn't shed any light on how it will make good on investments that valued the company at $15 billion.

Yeah, I've wondered how long these sites could manage to keep this up. Seriously, they encourage everyone to upload everything possible.... who the heck is paying for this?

For all the frenzy surrounding citizen-produced media, the content that seems to do best online is the same stuff that did well offline—content produced by professionals. My colleague Jack Shafer recently listed the many services that people are willing to pay for online. They include music from iTunes, game videos from MLB.TV, reviews from Consumer Reports, and articles from the Wall Street Journal—and nothing made on some dude's cell phone.

My interest in this, I've always been careful about biting off more than I can chew with Subsim (I was really burned with big bandwidth overage charges a few times in the past ) but over the last year or so, I concluded that we can sustain more services like the forum photo albums and the updated downloads section and still stay within the limit of our server contracts.

Of course, most of the stuff here is serious material, not something made on some dude's cell phone, lol.

Neal