Stream This: YouTube Myths Far From Busted

Many people, myself included, have asked for some time now when YouTube will show a profit and what its long-term business plan is. In July, YouTube went on the offensive on its Biz Blog (http://ytbizblog.blogspot.com) to "debunk the top five myths about YouTube." While one might think that Google is finally going to provide us with real information on YouTube’s business, the post doesn’t provide enough details to truly debunk anything.

This is the first time I can remember that YouTube has gone on its blog to address topics being discussed about it in the industry, and this comes at an interesting time. This summer we saw several Google executives telling people in the media that they are tired of analysts trying to figure out Google’s costs, and one has to wonder if this is the start of Google trying to fight back.

While the YouTube blog post ends by saying, "These myths are officially busted," it didn’t officially bust anything, at least not in my eyes. Without facts and numbers, the few data points it gave out aren’t detailed enough to debunk anything.

Myth 1: YouTube is limited to short-form user-generated content.
Google says, "We have thousands of premium content partners, from Sony to Disney to Universal Music, and fans can find hundreds of full-length feature films and thousands of full-length TV episodes on YouTube."

We know Google has premium content partners, but first, define what a "premium" partner is. How do we know YouTube really has thousands of them? And while Google does point us to the YouTube movie page, of the 12 videos clips highlighted for me on the homepage, seven of them are trailers and not full-length feature films. What percentage of full-length feature films and TV shows make up the total number of videos on YouTube? Clearly not even 1%. Now that would be fine if these premium content partners were still making up the vast majority of YouTube’s revenue, but Google gives us no indication of that.

Myth 2: YouTube videos are grainy and of poor quality.
Google said, "It was only eight months ago that we launched HD videos on YouTube, and we already have more HD videos than any other video site. Hundreds of thousands of HD videos are uploaded to the site every month, and tens of millions are viewed every day."

Granted, some of the poor video quality you see on YouTube is the way the video was shot and is not YouTube’s fault. Yet, one of the metrics we use to judge quality in the industry is how long it takes the video to start up, something typically referred to as "frustration time" in the industry. Even after years of development, YouTube videos still take way too long to start up and still have buffering problems, and video delivery has not improved since Google bought YouTube almost 3 years ago. Does it really matter how many HD videos YouTube has when the videos won’t play properly? Not to mention, YouTube launched its HD video offering nearly 3 years after content owners such as ABC (among others) were already delivering HD-quality videos with relatively little frustration. Google refuses to address or answer any of the questions surrounding the poor video experience as a result of its video delivery.Myth 3: Traffic, growth, and uploads are bad for YouTube’s bottom line.
Google says, "There’s been a lot of speculation lately about how much it costs to run YouTube. The truth is that all our infrastructure is built from scratch, which means models that use standard industry pricing are too high when it comes to bandwidth and similar costs. We are at a point where growth is definitely good for our bottom line, not bad."

I would agree that no one truly knows YouTube’s costs except for the company, and everyone else is simply speculating, with some having more details than others. But all of this speculation could end if Google would be straightforward with its numbers. Google has to expect people are going to try to figure it out and should not be "annoyed" when it sees such speculation published. Also, growth may be good for YouTube’s bottom line, but it wouldn’t be if it was not owned by Google. So let’s take that into consideration along with the fact that companies say things are "good" all the time, only for us to find out later that they really weren’t.

Myth 4: Advertisers are afraid of YouTube.
Google says, "Over 70% of Ad Age Top 100 marketers ran campaigns on YouTube in 2008. They’re buying our home page, Promoted Videos, overlays, and in-stream ads."

I don’t doubt this data, but without revenue numbers it’s meaningless. What percentage of all of those advertisers and the revenue from them comes from ad banners on the YouTube website? We’re waiting for YouTube to figure out how it is going to monetize the video, not simply the traffic to the page where it delivers banner ads. Break out the numbers for us. Even if YouTube doesn’t want to break out the revenue, show us what percentage of advertisers are doing in-pages, in-streams, overlays, banners, etc.

Myth 5: YouTube is only monetizing 3%—5% of the site.
Google says, "This oft-cited statistic is old and wrong, and continues to raise much speculation. In our view, the percentage is far less important than the total number of monetized views, and we are now helping partners generate revenue from hundreds of millions of video views in the U.S. every week (and billions worldwide), more than any other video site has total views. Monetized views have more than tripled in the past year, as we’re adding partner content very quickly and doing a better job of promoting their videos across the site."

Once again, we don’t have any actual data from YouTube to prove its point, we just have to take YouTube’s word for it. It does say that the 3%–5% number is old and wrong, but it doesn’t share with us what the accurate number actually is. I would agree with YouTube that the number of monetized views is what’s most important, but you also have to take the volume of monetized views into account as well.

Monetization only works as a business model if the volume of videos you get revenue from is large enough to support your business. Also, when YouTube says something has "more than tripled," that really means nothing to us without numbers. It sounds good, but what’s the base number it was working off of that actually tripled?

I like seeing Google going on the offensive, but unfortunately this post by YouTube didn’t answer any of the so-called "myths" in the industry. Are they myths? Maybe, but until YouTube proves it to us with actual numbers, no one is truly going to know.