As my colleague Eric Quanstrom (VP Marketing & Strategy at Sorenson Media) points out, at its current pace, YouTube will cross 15 billion monthly views by year-end. And, perhaps even more amazing is that YouTube is now the second most used search engine, thereby giving Google an unbeatable 1-2 punch. Amazing news for Google, right? That's a massive amount of eyeballs against which to throw ads.
But, ultimately the only numbers that matter -- the ability to monetize -- just ain't happening yet as we all know. Instead, as Eric points out based on an analysis by Credit Suisse, YouTube takes in roughly only $20 million per month. And if you take this number and divide it by total views, that means that YouTube makes a paltry 1/5 of 1 cent (i.e., $.0022) for each view -- thereby bleeding cash to service the service. Credit Suisse estimates $470 million of blood -- in the red -- in 2009 alone.
Yet, Google management, of course, continues to believe (invest) that YouTube's 8.9 billion eyeballs are worth vastly more ultimately than virtually any other competing use of cash. And Quanstrom's conclusion? In his words, "this may very well be the most effective destruction of wealth (attention, business models, competitive resources) we've ever witnessed, ever. Completely fascinating."
Well, perhaps the biggest destruction of wealth is AIG and others of its ilk during the current economic melt-down. But, Quanstrom's point is well-taken, although Google undoubtedly has a master-plan ... they must, right?
(Although Twitter is doing its best do destroy that plan ... read this -- http://scobleizer.posterous.com/why-twitter-is-underhyped-and-is-probably-wor)