Chris Hurley

Google (still) loves YouTube

July 31, 2009: 8:22 AM ET

The video-sharing site loses money and has failed to attract quality studio programming. So why does Google continue to pump money into it?

YouTube co-founder Chad Hurley (left) and product manager Salar Kamangar

YouTube co-founder Chad Hurley (left) and product manager Salar Kamangar

You would think Google's executive triumvirate -- CEO Eric Schmidt and co-founders Sergey Brin and Larry Page -- would be worried about YouTube. Almost three years after they forked over $1.65 billion in stock to acquire the video-sharing site, YouTube last year delivered only an estimated $240 million in revenue and is deeply in the red.

YouTube is the largest video platform in the world. Users upload 20 hours of video to it each minute, at tremendous cost to Google (GOOG). The company doesn't break out YouTube's expenses, but analysts believe it spends tens of millions of dollars each month just on network capacity to host all those videos.

And, oh, what videos! Four years after its inception YouTube remains a repository for "long tail" content that appeals to niche audiences: clips of cats on skateboards, babies laughing, and kids lip-synching. (There are occasional mass-audience moments, like the clip of Susan Boyle on Britain's Got Talent, viewed 71 million times.)

Gallery: See YouTube's greatest hits

But despite Google's repeated efforts, YouTube has failed to create an environment for professional video content, where many advertisers are clamoring to put their money right now. More

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