YouTube figures out how to solve it’s financial woes

It was revealed a couple of days ago that YouTube is burning a million dollars a month on Bandwidth costs. For a startup with hardly a revenue stream and a mere $11 million in venture capital, they can’t even keep running for a year at that rate. It looks like they figured it a solution though; the problem isn’t the lack of revenue stream, it’s all that dang content and users watching it:

Hypergrowth comes with hyper-growing pains — just ask YouTube. The online video-sharing site is facing a rebellion among the formerly faithful. Yesterday, blogger and longtime YouTuber Miel Vanopstal lost his cool in a post titled “Screw YouTube.” Vanopstal complains that YouTube’s recent upgrades have made the site significantly slower, and that new efforts to enforce copyright and delete otherwise questionable material strike him as arbitrary. He is particularly galled that a single alert notice from a “puritanically minded” fellow user can result in a video being deleted. “I’ve had it with these random rejections,” he writes.

Vanopstal is hardly alone. A bitter Nathan Weinberg at InsideGoogle says that he was kicked off YouTube two months ago. Weinberg chronicles his dissatisfaction with the free (and reportedly money-losing) service, ultimately deciding that he has only one thing left to do: “Ruin YouTube” by systematically reporting all of the site’s traffic-generating but copyright-violating videos. Microsoft’s (Research) Don Dodge, who formerly worked at Napster (Research), adds a been there, done that post to the fray, noting sagely: “User-generated content is very difficult to manage and control.”

See, if you get rid of all the content, and all the users who watch it, then they don’t have to serve any videos and their bandwidth costs disappear.

Seriously – I can’t imagine why anyone would have launched a video site without a damn good idea for a revenue stream (beyond “I hope someone buys us”) and working out the copyright issues better than a sorrry attempt to try and police it. Clearly, users want to be able to use a service like this to share and mashup copyrighted clips; this is YouTubes bread and butter. Somehow, someway, media companies need to get their heads out of their asses and allow this – it would be in everyone’s best interest. But until that happens, YouTube is just the one that’s hurting the most from the current state of affairs, with the everypresent specter of MPAA lawsuits on top of those mind boggling bandwidth costs… it won’t shock me if they turn out to be the first major dotcom bust of the “web 2.0” era.

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