bean said:
it's amazing to me that VC's would dump $11 mil into a company that doesn't have a solid business plan that includes how they're going to generate revenue. That was the hallmark of dotcom-bubble startups: having a really cool idea that people will really love but planning that you'll figure out how to make money later.
I agree. It's very risky and I think bad business to invest in something where the revenue stream isn't defined yet. That being said, I think there's no doubt, that the site itself and its numbers will continue to blow up (ala MySpace). These kinds of sites are just so viral, I think the VCs salivate at that potential of a giant pool of consumers and ad-watchers, that they [advertisers] can market their products toward later, that the risk just might be worth it to them. Let's hope for the economy's sake, their hopes aren't burst again though.
[Edited on Apr 30, 2006 by SuicidePuppies]
No-one commenting on this thread has the fucking faintest idea what YouTube told their investors, or what their long term plans are. NONE. And, as bean pointed out, advertising has become a serious revenue stream, especially for sites with the huge number of page views that YouTube is pulling in.
YouTube's strategy is to build out an audience and then derive ad revenue delivering non-traditional ad content to that audience. The company is currently exceeding all VC and industry expectations for subscribers/eyes; earning a distinction for understanding a difficult to capture market segment.
YouTube now delivers "ad content" in the form of movie/video previews and recently penned agreements with MTV, E!, Hollywood Records, and others as media companies compete for reach to 13-25 year olds. It's rumored that the recent unexplained pre-release of NBC/Universal's Saturday Night Live was actually a test of sorts by Universal in an effort to better understand reach, recency, frequency, and monetary value.
Despite VC funding, the market capitalization of YouTube remains low and some view YouTube as largely an acquisition target for someone like Google who are also researching the intermix of advertising and entertainment - similar to their efforts with advertising and editorial content.
Disclaimer - we researched a similar company seeking funding about 2 years ago.
hadees
Austin, TX
December 2003
APR 30, 2006 02:32 PM