YouTube’s A “Rocket Ship”, But A Tough Place For Others To Make Money: Fortune

If you’re interested in YouTube, then check out Fortune’s new cover story — titled “How YouTube Changes Everything” (goes online today and hits newsstands Monday) — and stick with it to the end. The most intriguing, and critical, observations are buried. “Even as YouTube explodes in popularity, making money in its world remains a challenge for all but Google itself,” writer Miguel Helft says deep into his piece. One entrepreneur, Jason Calacanis, observes that while YouTube is “amazing for marketers, individuals and companies seeking to reach a large audience,” the business itself is “a trap.” He raises some common complaints: YouTube’s 45% slice of the ad sales pie is too big. It fails to provide enough marketing support. And YouTube, not individual producers, controls the relationships with viewers. Google shouldn’t complain, though. The criticisms are after-thoughts in largely flattering profile that confirms DreamWorks Animation CEO Jeffrey Katzenberg’s observation that “this thing is like a rocket ship.” YouTube’s viewership is up 50% over the last 12 months. Barclays estimates that it’s worth as much as $21B — not bad for an asset that Google bought in 2006 for $1.65B.  Although YouTube “is not about to kill off television,” the story says, it is “definitely starting to disrupt mainstream entertainment” especially among millennials. “Viewers consume 6 billion hours of YouTube videos monthly — that’s almost one hour for every person on the planet.” Fortune also lauds YouTube chief architect Robert Kyncl’s $100M investment in original channels in late 2011, noting that the publicity it generated “helped to legitimize YouTube as a destination for serious content creators.”

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