A couple months back, we ran a post by Benjamin Wayne, CEO of Fliqz, arguing that YouTube is doomed.
Many readers freaked: How could YouTube be doomed?
Instead of attacking Benjamin’s numbers, though, most bashed his obvious conflict of interest: He’s the CEO of a quasi-YouTube competitor!
(To which we might respond: Who better to know?)
In any event, in a recent interview with AdAge, Benjamin stands behind that opinion:
Simon Dumenco: Did you hear from anybody in the Google camp in response to “YouTube Is Doomed”?
Benjamin Wayne: We didn’t hear from anyone directly, although we got a sudden burst of traffic from the Google folks on the Fliqz website. [laughter]
Dumenco: I found it amazing that a lot of other observers initially just brushed off the thought of a half-billion-dollar loss, as if Google could just cheerfully absorb it.
Wayne: Consumers are basically unwilling to believe that anything bad could ever happen to YouTube because they’ve become emotionally attached to a product that they believe should continue to exist and that Google should continue to subsidise. But from a balance-sheet perspective, it’s just very hard to make the numbers work over time. And when you look at the impact in terms of the overall market capitalisation of Google, it’s pretty significant. And so in a recessionary environment, when the cost of capital is so high, you have to wonder how long a company like Google can sustain that.
I think that the real problem is that YouTube is taking all the stuff that’s good that they can monetise, and they’ve already monetized that stuff. If you look at the way in which content is growing on YouTube, the user-generated novelty content and the copyright-infringement stuff is growing much faster than the content they can monetise. So whereas, with most businesses you’d say, well, over time it gets better, I think YouTube has a business where over time it continues to get worse, because the proportion of content you can’t monetise continues to outstrip the portion of content that you can.
Dumenco: What about Hulu in this mix? They made the very strategic decision to keep out the non-monetizable riff-raff and make these extensive strategic partners with A-list content creators. And now they have even Disney onboard.
Wayne: I love Hulu, but problem with Hulu is it’s kind of a non-repeatable phenomenon in the sense that they took content where the cost of producing the content and building the brand and attracting the audience had already been absorbed in the TV world, and they took that content that already had this rabidly loyal brand audience, put it online and monetized the fact that they didn’t have to absorb any of the cost of building the brand or building the audience. Whether or not you can do that when you have to absorb all those initial production, distribution and marketing costs — I’m not sure the value equation still works. They’re monetizing the Long Tail effectively because they’ve already monetized it first on TV, then through DVD and cable, and now they’re monetizing it again online, so it’s all found money from their perspective.
See Also: YouTube Is Doomed