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Jun 19, 2008

NEWS: Will Indie Movies Crush YouTube? No.

Will Indie Movies Crush YouTube? No.

10mph.jpgSo YouTube (GOOG) has opened its doors to filmmakers who want to upload long-form video. The new limit for partners, with whom YouTube splits ad revenue, is 1GB per file. That's enough for hours of video at YouTube's bit rates, and even enough for some (shortish) DVD-quality Hollywood films.

So will the move crush YouTube under the weight of the masses watching movies? Short answer: no -- because YouTube is really big (and parent company Google is even bigger), so it can shrug off concerns that might flatten another competitor. And it might well make money on the deal.

Longer answer: Because YouTube bypasses CDNs and peers directly with big Internet exchanges, YouTube pushes data on the Web more cheaply than anyone. Their cost of streaming is a tiny fraction of a penny per user per hour. If it were 1/4 of a cent, we're talking about $250 to stream an hour of video to 100,000 users -- and we can make informed guesstimate that YouTube is paying even less than that. Meanwhile, assuming YouTube can sell at least one Adsense For Video ad at a $15 CPM, that's $1,500 in revenue.

Storage costs? Yes, there are some, but they're tiny. The going rate is $175 per terabyte (1,000 gigabytes), and that's subject to Moore's Law, so it should likely drop by half every two years or so. Meanwhile Assuming YouTube can sell at least one Adsense For Video ad at $15 CPM, that's $1,500...

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