In a moment of what now seems like irrational exuberance, YouTube cofounder Steve Chen declared that the popular online video site would add live video streaming this year. Not so fast, says Google. YouTube is already struggling with the concept of profitability, and according to an anonymous source cited by Silicon Alley Insider's Michael Learmonth, Chen's idea is a financial black hole:
YouTube execs estimated that if just 10 percent of the service's users took advantage of live streaming, the company would have to add 20 to 25 percent to its huge server and bandwidth infrastructure to support it.
Sounds like another sign that YouTube's popularity, while giving it a great position in the market, has become something of an Achilles' heel — every video played, every user added cost the company money, and neither creators or consumers are paying. Advertisers are only interested in a small percentage of videos on the site, and YouTube can't even sell all of that inventory. So adding new features such as live streams or improving quality would only serve to dig Google's $1.65 billion money pit even deeper. The episode is enlightening in one regard, though. It demonstrates how much influence YouTube's founders have at the company — little to none. (Photo by Ben Cooper