YouTube Promotes Audience Size, but Sales Are Wanting

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YouTube logo

The Wall Street Journal reports that the management of Google Inc.'s (NASDAQ: GOOG) giant video site - YouTube - has started to promote its audience size. What management does not say is that YouTube has been a financial disappointment, and that is unlikely to change. It is a product without a profitable model, likely because so much of its content is junk.

The Wall Street Journal reports on YouTube's claims about viewer growth:

More than one billion unique visitors watch more than six billion hours of YouTube videos a month, up from about four billion hours a month last year, said Robert Kyncl, a top YouTube executive.

Online research firm Comscore puts that number much higher. It claims that 12.7 billion videos were viewed on YouTube in March in the United States, and that the average visitor spent 397 minutes on the site. YouTube management may say that its numbers are based on a different means of measurement, but the site's audience is colossal by any estimate.

YouTube's audience dwarfs that of other sites that have video. That includes the three portals - AOL Inc. (NYSE: AOL), Microsoft Corp.'s (NASDAQ: MSFT) MSN and Yahoo! Inc. (NASDAQ: YHOO). Nevertheless, YouTube's sales are so tiny that they do not bear comment from Google's senior management. YouTube was not even mentioned in Google's first-quarter financial results press release.

YouTube has tried to offset its lack of advertising success with plans that allows premium video creators to put their content on the site and charge fees to viewers. But YouTube faces competition for that business from a string of other companies, which range from Netflix Inc. (NASDAQ: NFLX) to Inc. (NASDAQ: AMZN) to Apple Inc. (NASDAQ: AAPL) and every cable and satellite operation. YouTube was late to this market, which is already dominated by number of successful brands.

There is no single piece of analysis that explains YouTube's failure. However, the YouTube site has an environment that is entirely different from other sites that carry high-end video advertising and offer video rental. YouTube's content continues to be dominated by millions and millions of amateur video clips, most of which have low resolution. Those do not fit well next to the content that YouTube wants to promote as its future. Perhaps YouTube's trouble is because it cannot prove that high-quality video content will ever come close to low-quality video, as least as far as volume on the site is concerned.

Advertisers and movie studios do not want to slum.

Filed under: 24/7 Wall St. Wire, Media Tagged: AAPL, AMZN, AOL, GOOG, MSFT, NFLX, YHOO