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Why Cuban is right about YouTube September 18, 2006

Posted by sdpurtill in Business, Flash, Technology.
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Mark Cuban recently posted The Coming Dramatic Decline of YouTube, and I must say… I am in total agreement.

I think the main two reasons why YouTube is destined for failure is because 1) they don’t have the infrastructure that Google does and 2) they don’t have the ability to grow internally as fast as they are on the outside (they can’t hire fast enough)

My first point is self explanitory: Google has much deeper pockets and hundreds of thousands of servers around the world. Google is the fastest most reliable CDN in the world (correct me if I’m wrong). Online video is in its beginning stages still, and it’s going to take a while for people to realize that video quality and dl speed matters more than upload speed and amount of content.

My second point: they can’t hire fast enough. They are huge. They need to sell right now to a company that knows what how to deal with such fast growth. Last time I checked, they had like 20 employees and were working above a pizza parlor. Um… Yeah. Right now, going with 37signals motto “less is more” isn’t really going to help. YouTube makes enough money every month that it won’t be much more overhead by hiring on 1,0000 employees to make their site better.

I hope to look at this post in about two years and see if I’m right. What do you think ?

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Comments»

1. Chris Tew - September 18, 2006

You have kind of contrdicted yourself here.
You say google have much deeper pockets than youtube.com (inferring the models of hosting user videos and paying for the bandwidth is causing a loss), and then saying Youtube.com, a company that has been critized time and time again for not being able to monetize on its traffic, could afford hundreds of employees.

I dont actually know how many employees they have or how many they need. As a comparison I think Craigslist.com (29 busiest site in the world according to alexa) has less than 10 emplyees last time I checked.

2. sdpurtill - September 18, 2006

Chris,

I agree; I have contradicted myself. However, YouTube is much different than Craigslist. It needs more developers, monitors, etc… I think if a big company bought YouTube out right now, it would be the best move they could make.

By saying Google has deeper pockets, I didn’t mean so they could take the losses. I meant so they could expand and buy more servers faster. They have more resources is what I meant to say I guess.

Ultimately, monetizing online video is a losing propisition… People won’t pay for it until it is HD.

3. Jon Gales - September 18, 2006

Google may have all the cash right now, but YouTube is a much better product than Google Video. Sometimes small works. Google’s focus is and always has been on search. Their “me too” products aren’t usually great, the exception may be Gmail (though arguably the reason why Gmail works so nicely is the integrated search).

Also food for though, back when Yahoo ruled the world the same arguments were said about Google. They were too small. Couldn’t scale. Etc etc.

4. sdpurtill - September 19, 2006

No, YouTube is NOT a better product than Google Video. YouTube simply has a bigger user base, and that’s what makes it popular. If it wasn’t for the user base, YouTube wouldn’t amount to ****. Yeah, I’m sure people said stuff about Google when they were small. YouTube isn’t exactly small though; they’re the 26th most popular site on the net or something like that.

5. Kane - September 19, 2006

Youtube need to cross the chasm,
They have no strategy. Someone get the ceo and all their execs Geoffrey’s book.

6. taco - September 19, 2006

Man I tottallly agree with you. you are the man. You thoughts are so accurate you made me wanna change my life!!!

7. mattbear - September 20, 2006

YouTube is very popular and has an ever-growing user base. They will survive, simply because they have incredible name recognition and are the popular choice. It is similar to MySpace – it continues to succeed solely because it is the first thing so many people think of when discussing that niche.

Most likely, it will be bought out by some larger company, but it will go on.

8. xonger - September 25, 2006

Google and Youtube dont own their content, they have websites, they have 3 years and its a wrap on both of them for the video sector anyways! Xonger.com has the right idea, produce and distribute your own content. Well our hat is off to Mr. Cuban for trying to take on an area he failed in with HDNET, he of all people should know content is king!


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