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Google purchased YouTube for more than $1 billion, but can't make a profit on the popular video sharing site

After purchasing YouTube for a hefty $1.65 billion three years ago, Google is still trying to find ways to turn the world's No. 1 video sharing site into a profitable business.

"In the not-too-long distant future, we actually see a very profitable and good business," Google CFO Patrick Pichette said during a conference call.  "We are really pleased with the trajectory."

Google has been working more closely with Hollywood, agreeing to licensing deals with Time Warner and Walt Disney.  These partnerships will help bring additional professional content to YouTube, which is seen as a necessary step to help attract new advertisers.

Financial analysts are now predicting YouTube will lose between $70M and $500M throughout 2009, so Google's latest attempts to turn the site into a profitable business must succeed.  Despite paying such a heavy price tag in 2006 -- and continually losing money -- YouTube's large viewership could open the door for Google to one day make big bucks, once officials figure out how to woo new advertisers to the site.

YouTube is now attempting to generate revenue throughout the site, though site designers hope to avoid intrusive ads that will drive users away from the site.  YouTube uses banner ads on the front page, text ads that run before, during and after videos, and select videos, such as movie trailers or interviews, are located in a specific area.

"These are not signs of what I call a smart acquisition, these are signs of a dumb acquisition," Global Equities Research analyst Chip Chowdhry told the San Francisco Chronicle.

Google, as it continues to carefully try and woo new advertisers, said the company had "yet to realize significant revenue benefits from our acquisition of YouTube," and that trend is expected to continue through the rest of 2009.  Even if the company is able to begin turning a profit on YouTube, some analysts believe it still won't be enough; for example, Bernstein Research said the ad revenue wouldn't even cover bandwidth and data storage.

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RE: ..
By kaoken on 8/25/2009 1:00:05 PM , Rating: 2
200MB limit? LOL what are they doing streaming youtube videos?

RE: ..
By StevoLincolnite on 8/25/2009 1:14:03 PM , Rating: 2
The average Joe doesn't really know the difference between 200MB and 200gb, but when they see an advertisement for ADSL 2+ up to 24mbps with 200mb worth of downloads at a "low price" of only $69 a month, they think they are getting a bargain, hence why ISP's manage to get away with it.

They only realize the mistake at the end of the Month when there bill is a couple of thousand dollars, I once saw one guy who reportedly had a 40 thousand dollar bill on a 200mb plan after he downloaded almost 300gb in a month.

The funny part is, consumers KEEP falling into the trap, so companies keep leaving the trap in place as they make a massive amount of money.

A 200mb plan is fine, if all you want to do is check your email once a week, and want something cheap. (Although that specific plan isn't cheap, you would be better off getting a 256k/64k plan for $30 a month).

RE: ..
By sigmatau on 8/25/2009 2:24:38 PM , Rating: 1
Dude, simply put, your ISP is screwing the hell out of you. People can tell the difference between 200MB and 200GB. Are you kidding? One Youtube video can be 200mb.

I couldn't imagine a 200MB cap with dial up. I can download 200mb in about a minute or two. You can't be right. There is no way 200 megabytes is correct. Check your numbers. Loading the front page of Dailytech will probably take up half of that.

RE: ..
By 4wardtristan on 8/25/2009 6:05:10 PM , Rating: 2
yes, but this is the worst case scenario, going through the most expensive isp, telstra

smaller isps such as TPG have much better plans

25gb+25gb 24mb dsl2 for 50$ a month, and you get capped after your 50, not charged extra.

thats more the standard, not this 10gb rubbish this poster speaks of.

RE: ..
By rhangman on 8/25/2009 10:17:07 PM , Rating: 2
Telstra is AU$310 a month for unlimited ADSL2+. No limits, no caps. Expensive but a hell of a lot cheaper than downloading TB's through a 200mb plan.

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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