A few days ago, Google CEO Eric Schmidt spoke to The New Yorker about the problems in making money on YouTube, and how hard the company is finding it to make the site a profitable one.
He said that it “seemed obvious” that Google should be able to generate “significant amounts of money” from YouTube, but so far, that wasn’t happening, and he had no idea how to successfully accomplish the goal.
Time To Kill Off YouTube?
In response to this supposed admission of a chink in Google’s armour, Don Reisinger has written a controversial but very thought-provoking article for CNET in which he asks if Google should actually just give up and kill off YouTube once and for all.
Google has so far failed to really see any return for its whopping $1.65 billion investment in the company, and with there really being no concrete plans in place for that to change any time soon, is it time to cut and run?
Future Plans?
Schmidt did give vague pointers towards some new ways in which Google was going to start making money from YouTube, by far the biggest video site currently on the Internet, but that side of the business is very cloak and dagger at the moment, and not really detailed enough to provide the shareholders with any kind of confidence.
Reisinger claims in no uncertain terms that the acquisition of YouTube was a major blunder for Google, and one which it may now be regretting due to the lack of returns.
Hulu Gaining More Advertisers
As much as Google wanted a piece of the huge online video advertising sector, will advertisers actually ever choose YouTube with its very random content over a site like Hulu which has controlled content, and the audience demographics are veered more towards the people advertisers generally seek to reach.
So Google is now faced with a stark choice: change the very nature of YouTube, with more controls on content in place, risking the very sizeable audience it currently has in place, or to get out of the business altogether.
The Last Resort
Though even Reisinger admits that killing YouTube off would be an ultimate last resort, there will certainly come a time and circumstance when it will be the only viable option left open to Google.
At the end of the day Google is a business, and one which needs to be making money to survive. How long can it continue propping up a company with as poor a business model as YouTube seems to have before pulling the plug?
