Jun 18, 2008 02:40 PM
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Tue Feb 9
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Two years ago, Mark Cuban wrote: "Would Google be crazy to buy YouTube? No doubt about it. Moronic would be an understatement of a lifetime." Since then, Google did buy it — for $1.65 billion — and the site's become so popular its actually the Web's third most popular search engine all on its own. Does that mean Cuban has changed his mind? No, no, it does not. The reason is Hulu, Cuban explains in 802 words, which we've edited down to 100, below.
YouTube has become the poster child for the old saying "we are losing money on every sale, but we will make it up in volume." YouTube is broken. The reason is Hulu. Hulu posts clips on YouTube. Those clips cost Hulu nothing, generate traffic to its Hulu site on which it sells out. Two areas that Hulu is stomping Youtube: 1. Revenue Per Video 2. Revenue Per User. Hulu has the right to sell advertising in around every video on its site. YouTube has that right for only [a] small percentage of videos because YouTube hides behind the Digital Millennium Copyright Act. By next year, Hulu will have more total revenues than YouTube. The more traffic Hulu generates, the more money it makes. The more traffic YouTube generates, the more money it loses. Maybe they think they will make it up with even more volume?
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