YouTube Serving Up One Billion Videos A Day?

YouTube is serving up one billion streams a day, Google (News - Alert) now says, and that leads TechCrunch to believe that global video streams now average about 80 billion a month.

It also means, on average, that every Internet user on the planet watches one YouTube (News - Alert) video every day.

That would be in line with what bandwidth vendors say about the nature of global traffic these days. Where voice once was a proxy for backbone traffic, to be replaced by data, now it is video that almost single handedly drives global bandwidth demand.

For Google, all that usage creates a problem. Though some Internet users and advocates like to rail about evil ISPs, servers and bandwidth have a real cost. Up to this point, using far-lower traffic estimates than Google now confirms, analysts have suggested Google was losing $300 million a year.

The numbers probably mean that the service is losing much more than analysts figure, a number that ranges as high as $300 million a year. It also means that Google’s challenge to create sales from the service faces larger hurdles than imagined.

Until now, Comscore, for example, has estimated that Google streams 225 million videos a day, or about seven billion a month. Nielsen has estimated Google's video streams at 5.5 billion a month.

The billion-a-day level means traffic is four to six times higher than previously believed. Bandwidth costs do not scale linearly, though servers do. So the additional bandwidth cost is not four to six times higher than believed, nor the operating cost those multiples of $300 million.

But could the actual operating cost raise Google's losses on YouTube to as much as $600 million? Plausibly, yes.

And therein lies the great business model challenge. Up to this point, advertising has seemed the logical driver of revenue, as attention normally bubbles up into ad revenue.

And one billion views a day is attention. YouTube’s problem is video quality. Most of the video is not the sort of thing most marketers want to be around.

As with just about everything else connected to the Internet, business models remain an active concern. So much for the notion that everything should be free on the Internet -- nothing is ultimately free, though cost might be borne indirectly.