Was just reading a post from Mark Cuban, Blog Maverick, about what he percieves as desperation on the part of Google when it comes to monetising all that User Generated Content on their site.
Frankly, I don’t have the time to be a big YouTube watcher, so I’ll take Mark’s comments about changes and user experience at face value. Regardless though, I’ve long been a skeptic of the “we’ll build a loss making business with lots of eyeballs, and work out how to make a buck from it later” approach used by so many Web 2.0 consumer web plays.
And if Google can’t seem to make this work, you’ve got to ask yourself: “what hope does anyone else have”?
As remarked by Mike Cannon-Brooks in a SiliconBeachAustralia podcast, the sheer volume of eyeballs required to generate a sustainable business, assuming generous CPM’s, is amazing. If you want to have a $10m revenue business, you need to make close to $1m/month. If you manage to get $10 CPM, then you need 100 million page views per month – this is pretty massive scale, all for a business that could afford to employ, at most 50 staff, and that’s assuming you’re generating all of your own content (no licencing costs), and that your server and bandwidth costs aren’t too high.
Of course, this doesn’t mean is isn’t possible (divide all numbers by 10 if you and a few mates want to make it as a small crew), but unless you’re able to drive up your CPM by having content close to a transaction, in the current economy, its going to be an uphill battle.