About half of that bill is bandwidth alone, $360 million. Don’t worry, Credit Suisse showed its work:

To arrive at the estimated $360 million bandwidth tab for YouTube, the analysts assumed the site will receive 375 million unique visitors in 2009 and that a maximum of 20% of those users are on the site at any given time. Credit Suisse’s analysis then assumed each user downloads a video at 400 kilobits per second, to yield a peak bit run-rate for YouTube of 30 million megabits per second.

Other reports have placed YouTube’s revenue this year anywhere from $120 million to $500 million.

Of course, bandwidth costs aren’t new: Facebook has been battling rising costs and falling revenue-per-users for some time. On the other hand, YouTube has been searching for effective monetization basically since Google acquired the company.

What do you think? Can YouTube make money to sustain itself long enough to find a business model that really works?

Comments

Credit Suisse Puts Google Near $900

Those who think this sounds unlikely might want to know that Google’s up about $27 for the day so far on the prediction alone.  Those who are discussing the existence of a bubble might be interested in the same information, though, and the gain only puts Google at $653.

Let’s look beyond the hype to the actual analyst’s words, then.  According to Jeff Kearns, Credit Suisse’s Heath Terry wrote, “Tremendous value will be created for Google shareholders as all advertising goes digital, including television, radio, and outdoor, and Google becomes the de facto ‘operating system’ for advertisers.”

Terry later added, “Search is a natural monopoly business.  Over time, Google will continue to gain share until they have effectively reached 100 percent.”  Given the latest numbers from Hitwise (which put Google’s market share at 64.49 percent), this point is hard to argue, and the search engine’s absolute dominance in France makes it even more difficult to disagree.

If Google’s stock does hit $900 per share, that will represent a gain of approximately 38 percent over its current price.

Not to insult your math intelligence, but that’s over a quarter-trillion dollars.

All that money is being pumped into or via over 2 trillion Web pages, at least in March 2007, a growth of 9% over February, from 763 million active Internet users (though some estimates say it’s closer to a billion – but why count zeros when one can barely fathom those multitudes to begin with?).

Again, to emphasize the numbers and not to insult you, according to Credit Suisse, the trillions of web pages are growing at nearly 10% per month. It’s a good thing we invented exponents – that’d be a lot of zeroes to count on your calculator screen.

That’s just in pages, though. The overall spend is projected to grow at a clip of 13% between 2005 and 2010 (didn’t the telcos say something about incentive to invest?).

As access speeds get faster, expect more money to flow into the system.

Global Internet access doubled between 2001 and 2006 to 34% penetration.

That’s expected to hit 47% by 2010, and advertisers will be spending over $50 billion to that audience.

To put that better in perspective, US advertisers spent $150 billion on all media in 2006, but the Web – in total spend – only brought in $170 billion.

As media converges (there will come a day when there is little or no division between print, television, radio, and Web), imagine what these numbers will look like in 2020.

Growing at the current annual rate of 25%, if my math is right, we may see a trillion-dollar media market and give "the Roaring 20′s" a whole new meaning.