The perils of predicting the profitability of internet companies

You get squabbles over whether Craigslist will bring in $100 million or $300 million this year. You get debates over whether Facebook is, in fact, profitable. And you even have wildly different estimations, some of which claim that YouTube is losing massive amounts of money while others estimate that it’s actually pulling in a profit.

YouTube is much closer to breaking even than widely thought, says a firm with intimate knowledge of global infrastructure costs. A widely publicized Credit Suisse report that said Google would lose $470 million on the site this year neglected to account for factors such as peering traffic, wholesale bandwidth deals and cheap data center locations. Where the bank said YouTube’s costs will amount to $711 million in 2009, RampRate, a San Francisco-based company that advises large companies on IT infrastructure, says the actual cost is $415 million

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