This is the most vapid, hear-yourself-talk analysis I have read in a while. Someone REALLY wants to invent a term (Google test), but can't think of a better reason.
Matt Marshall
· 3 years ago
Anon, I think the point is, in a nutshell:
YouTube gets all this criticism for using this bandwidth, but that this usage reflects something pretty significant -- that it takes guts to grab a stake in Web traffic, but worries about monetizing it should come later. And, if you're a Web company, and not displacing other peoples' traffic, you're doing something wrong.
Martin Levy
· 3 years ago
If YouTube is spending $1M/month on just the bandwidth portion of their business they are clearly out-of-sync with good business practices. Even if you ignore the "lets worry about making an ROI till later" statement, there is a clear disconnect between cost-of-goods and potential ad based revenue. Why? Because video is not static images (aka. Flickr) or news or classic web sites, it's video and video is REAL bandwidth that costs REAL dollars. Don't get all caught up because of cute flash-based video players, it's still bandwidth. Add to that the ability to embed a YouTube player in a blog and hence host video without the end user paying for it and you have a recipe for zero ROI on bandwidth costs.
You could consider video as the Third-Rail of the Internet. Touch it and you die.
This article clearly misses the point about bandwidth. There is good bandwidth usage (where ROI can be had) and there is bad bandwidth usage. This is bandwidth with no foreseeable ROI.
Mathew
· 3 years ago
Wasn't old Leland Sr. a railroad baron, not an oil baron?
easy facts to get straight.
UpChuk
· 3 years ago
"You could consider video as the Third-Rail of the Internet. Touch it and you die."
That is a great line!
John Myers
· 3 years ago
Good article - Jolitz gets it right. Matt, I'm glad to see you're finally getting columnists with the grit to tell it like it is. Keep it up.
Patrick Sassen
· 3 years ago
I'm absolutely amazed that no one else has noticed that Google was a big bandwidth consumer for the time and it still was a huge success. The point Jolitz is making seems to be that inhibiting your business strategy by worrying about negotiable line items like bandwidth (ever hear of "quantity discounts" Martin?) over grabbing market share is short-sighted and risk-adverse. No wonder Sequoia is the king of home runs.
Jason Cummings
· 3 years ago
I know everyone is tired of hearing about YouTube and FaceBook and Google and MySpace.
But they seem to be on a roll. Maybe they know something we don't?
ronald
· 3 years ago
Simple question when do you start worrying about ROI? Google was always been very smart, guess why they don't have big graphic ads plastered all over the place. Or how many text ads can they deliver for the bandwidth cost some other Internet company's with there graphic ads. Clicks count not bandwidth. Or how many packets has a Google server to send you before it can serve another customer. Now compare that to Video. Now try again ....
Pran
· 3 years ago
Spend big and worry about ROI later. This is the exact kind of craziness that resulted and ended in the dotcomm bust.
Its unfair to compare Youtube to the success of Google which had very good technology and a very innovative business model (both of which should make up a true Google test), neither of which is currently true with Youtube. As we know Yahoo, Google, and MS already offer Youtube like services minus the traffic.
At present, all Youtube has going for it, is the infamous "first mover" advantage. In other words, it flunks a true Google Test.
The geniuses at Sequoia will likely finally come out on top by selling/IPO etc. "Pump in a bunch of $, hype, and exit" sounds sooo dotcomm to me! I just hope this does not go the IPO route (under some creative super hype strategy) to burn the public at large.
Thomas
· 3 years ago
I agree with the first comment. This post shows the friction between Silicon Valley's engineering culture and the fact that Internet is largely a media play (best exercised out of L.A.). There is a reason why Sergei and Larry say they got lucky when asked how they did it by breathless Web 2.0 conference organizers during keynote Q&A. That reason is that they did, in fact, get lucky. Remember, they swore they would never put advertising in their searches, until they did. I love bubble 2.0. It's very interesting to watch SV make the same mistakes twice. Has anyone bought the Kibu.com domain? I hear it's available...
Tom Offenbach
· 3 years ago
Interstingly enough, the large consumers of bandwidth like goog, youtube, msft, amzn, ea , shutterfly, etc are beginning to realize that they are the ones with the true power when negotiating with the upstream providers. how many isps are going to shut down routes to youtube, goog, msft, etc? companies like these are in a position to start charging the isps to access their content as opposed to assumed inverse. on top of that, these large companies are becoming less depended on traditional network providers to gain more routes. most of these big companies directlyy peer with each other, in theory bypassing upstream network providers altogether. it would be interesting to compare power consumption of these companies because costs of power aren't going down and you can't multiplex it and all that other stuff you can to networks to get them to scale up.
clark
· 3 years ago
last time i checked, google's buiness model wasn't built on displaying copyrighted material illegally. google is search, search drives revenue. viewing videos does not drive revenue (and just TRY to sell ads on the front of those crappy videos - won't happen). This article is a complete whiff.
Eric Hansen
· 3 years ago
Like "contrarian" views, especially when they're right. Invest in winners who aren't afraid of making the big decisions. Bandwidth is an engineering and accounting issue which can be solved. But businesses succeed on getting and holding customers.
If you can't pay to play, maybe you should get out of the game.
Winsor Pilates Abs
· 3 years ago
Like what you have to say. Your blog makes good since to me.
Tim
· 3 years ago
Clark's comment was right on. No one will tolerate watching ads on YouTube, especially when they pull all the copyrighted material and all that's left is kids dancing in their bedroom in front of a webcam.
YouTube is going to be sued into the stone age now that google owns it, which means Google is going to have to strongly go after copyright violations, which will kill the audience. YouTube won't even be allowed to show kids lip-synching anymore because they're using popluar songs.
It's going to be the same deal that happened to Napster when they made it a pay service, no one will stay.
William Jolitz - The Startup F
· 3 years ago
I realize that with the exception of Tom Offenbach, who I know understands the value of a bandwidth-driven business model, many small businessmen don't - it goes against the grain.
Which is why Matt chose to label it 'contrarian'. It may be painful to consider.
To reconcile 'small' with 'big', here's a follow on that breaks it down in greater detail. While less crisp than 'The Google Test', it may be less misunderstood by those newbies to the 'big' deals. Yes, you have to 'think different'. Try to stretch, even if it hurts, just a little.
Khalil
· 3 years ago
I honestly believe that this situation with Goog/Youtube is more than vaguely reminiscent of 1999...too much valuation on a "non-product product". Too much credit is given to the bandwith driven business model. Ultimately, IMHO, it's content that rules the day. If we learned anything from the dot-bomb days, it's that at the end of the day, it's what you are actually selling that determines who wins and who loses. It's the product,not the traffic. It's called commerce for a reason. someone, namely, the public, has to purchase what you have in order to have a sustainable business model. I just don't see the average netizen buying this content. And if it's ad-driven, people will tune out eventually leaving investors holding an empty bag full of promise.
All Comments
YouTube gets all this criticism for using this bandwidth, but that this usage reflects something pretty significant -- that it takes guts to grab a stake in Web traffic, but worries about monetizing it should come later. And, if you're a Web company, and not displacing other peoples' traffic, you're doing something wrong.
You could consider video as the Third-Rail of the Internet. Touch it and you die.
This article clearly misses the point about bandwidth. There is good bandwidth usage (where ROI can be had) and there is bad bandwidth usage. This is bandwidth with no foreseeable ROI.
easy facts to get straight.
That is a great line!
columnists with the grit to tell it like it is. Keep it up.
consumer for the time and it still was a huge success. The point Jolitz is making
seems to be that inhibiting your business strategy by worrying about negotiable
line items like bandwidth (ever hear of "quantity discounts" Martin?) over grabbing
market share is short-sighted and risk-adverse. No wonder Sequoia is the king of
home runs.
But they seem to be on a roll. Maybe they know something we don't?
Google was always been very smart, guess why they don't have big graphic ads plastered all over the place. Or how many text ads can they deliver for the bandwidth cost some other Internet company's with there graphic ads. Clicks count not bandwidth. Or how many packets has a Google server to send you before it can serve another customer. Now compare that to Video.
Now try again ....
Its unfair to compare Youtube to the success of Google which had very good technology and a very innovative business model (both of which should make up a true Google test), neither of which is currently true with Youtube. As we know Yahoo, Google, and MS already offer Youtube like services minus the traffic.
At present, all Youtube has going for it, is the infamous "first mover" advantage. In other words, it flunks a true Google Test.
The geniuses at Sequoia will likely finally come out on top by selling/IPO etc. "Pump in a bunch of $, hype, and exit" sounds sooo dotcomm to me! I just hope this does not go the IPO route (under some creative super hype strategy) to burn the public at large.
There is a reason why Sergei and Larry say they got lucky when asked how they did it by breathless Web 2.0 conference organizers during keynote Q&A. That reason is that they did, in fact, get lucky. Remember, they swore they would never put advertising in their searches, until they did.
I love bubble 2.0. It's very interesting to watch SV make the same mistakes twice. Has anyone bought the Kibu.com domain? I hear it's available...
aren't afraid of making the big decisions. Bandwidth is an engineering and accounting
issue which can be solved. But businesses succeed on getting and holding customers.
If you can't pay to play, maybe you should get out of the game.
YouTube is going to be sued into the stone age now that google owns it, which means Google is going to have to strongly go after copyright violations, which will kill the audience. YouTube won't even be allowed to show kids lip-synching anymore because they're using popluar songs.
It's going to be the same deal that happened to Napster when they made it a pay service, no one will stay.
Which is why Matt chose to label it 'contrarian'. It may be painful to consider.
To reconcile 'small' with 'big', here's a follow on that breaks it down in greater detail. While less crisp than 'The Google Test', it may be less misunderstood by those newbies to the 'big' deals. Yes, you have to 'think different'. Try to stretch, even if it hurts, just a little.
I hope i am graet at it .
This test is maybe my best .
I hope i am graet at it .
This test is maybe my best .