Analysts claim YouTube could lose £321m in 2009

YouTube is on track to generate about $240m (£164m) in revenue in 2009, up about 20 per cent year on year, according to a report published by Credit Suisse. This revenue is projected to come mostly from homepage ads and in-video overlays.

But the cost of bandwidth, content licensing, ad-revenue shares, hardware storage, sales and marketing and other expenses will reportedly total about $711m (£486m), equating to a yearly loss of about $470 million (£321m), according to the report.

Bandwidth alone accounts for around 51 per cent of YouTube's costs, claim the analysts, with content licensing accounting for 36 per cent, or $256m (£175m) in 2009.

Despite having a library of about 150 million to 160 million videos, the analysts estimate that YouTube is only able to monetise about 3 per cent of its video inventory. But the report said that the videos that are being monetized are generally profitable.

The report attributed the lack of monetisation in part to the legal liability that could come with placing ads against unlicensed copyrighted content, and because of advertiser hesitancy about placing ads up against the vast store of mainly user-generated content on the YouTube site.

Google has reportedly already begun planning an extensive redesign of YouTube to give advertisers more prominence on the video sharing site, according to industry insiders.

It is understood that millions of video clips on the site will be filtered into four categories. Movies, Music and Shows will be home to premium content from professional producers, while Videos will group together YouTube's archive of user-generated clips.

This article was first published on revolutionmagazine.com