Recently we talked about the upstart sensation, YouTube. As a social phenomenon and a growing entity, YouTube's rise to glory has been nothing short of meteoric. In just one year YouTube has taken its business from zero to pumping out more than 35 Million streams per day, and it's still growing. That's pretty darn impressive, but, as the immortal Rod Tidwell once said, "Show me the money!"
You see -- there's a fairly developed pattern when it comes to replacing existing media outlets with their internet counterparts. The first step is to see if people will buy what you're selling when the cost is zero. YouTube has clearly been successful in that regard. In fact, their success has even convinced media giant AOL to create their own (nearly) feature-for-feature knock-off (see: http://communityvideo.aol.com/). [Disclaimer: this publication's parent company is owned by AOL.]
However, using venture capital money to subsidize the trafficking of copyrighted material is just the first step. Eventually, the fledgling business will have to hit step two: making money. It's there where the wheat is separated from the chaff. It's there where we find out if a new medium will enjoy long-term success or fizzle away like the pet rock.
Take blogs for instance: While blogs began as simple online personal journals, it didn't take long for enterprising souls to recognize that blogs held much more power than simply sharing your cat's diet with your 12 "readers." Yes, the majority of the blogs out there are still "by the people for the people." Yet, the medium has also spawned quite a few commercial sites (this site included). It's this commercialization that ensures the future of the medium.
But where is YouTube's legitimization? More specifically, where is the path to profitability? Millions of streams per day is quite impressive, but it's also quite expensive. Estimates for YouTube's traffic have been pegged as high as 200TB per day. No, that 'T' was not a typo; that's Terabytes. Bandwidth costs alone most likely approach one million dollars a month. Add on top of that the cost of running a service as massive as YouTube's, and you quickly come to the same conclusion: It's time for YouTube to stop growing and start making money.