YouTube Has Yet To Earn for Google

BusinessWeek takes a look at YouTube's revenue challenges in a recent article. While the article focuses mostly on advertising and revenue generation, the overall point (which the writer seems to sidestep) is that YouTube has not been the goldmine it was expected to be. YouTube is ubiquitous and has become the Coke or Kleenex of online video. It is a brand that identifies the whole category.

Still, Google paid so much -- $1.65 billion, anyone? -- that it would seem to be a bit of a concern that YouTube is not generating the kind of money it was expected to. The site has incredible value in search, especially since Google now regularly returns search requests with video, and that adds value to the Google brand overall. But a billion-and-a-half seems like a lot for a loss leader. Google gets a free pass in the mainstream media -- largely because much of that media doesn't understand the tech world -- but keep in mind that Microsoft once was Google and now that company makes mistakes like Vista. Past performance is no indicator of future success. Google's bottom line may be able to handle the hit, but you are only viewed as an infallible superbrand once. That perception may be even more valuable.