Everyone knows that print newspapers are our generation's horse-and-buggy; in the most wired cities, they've been pummeled by competition from the Web. But it might surprise you to learn that one of the largest and most-celebrated new-media ventures is burning through cash at a rate that makes newspapers look like wise investments. It's called YouTube: According a recent report by analysts at the financial-services company Credit Suisse, Google will lose $470 million on the video-sharing site this year alone. To put it another way, the Boston Globe, which is on track to lose $85 million in 2009, is five times more profitable—or, rather, less unprofitable—than YouTube.
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YouTube's troubles are surprisingly similar to those faced by newspapers. Just like your local daily, the company is struggling to sell enough in advertising to cover the enormous costs of storing and distributing its content. Newspapers have to pay to publish and deliver dead trees; YouTube has to pay for a gargantuan Internet connection to send videos to your computer and the millions of others who are demanding the most recent Dramatic Chipmunk mash-up.
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But YouTube's problems point to a larger difficulty for many Web startups: "User-generated content" is proving to be a financial albatross. Two years ago, Time magazine named "you" its Person of the Year for doing your small part in fueling the Web 2.0 revolution. The magazine argued that by collecting and distributing the creations of millions of individuals, the Web is upending the way we learn about what's going on in the world around us. There's no doubt this is true; you experienced the presidential inauguration through millions of pictures captured by ordinary people, and a lot of what you learn these days comes from articles put together by the anonymous hordes who power Wikipedia. Yet even though they've changed the way we live, sites that collect and share content produced by all of us haven't done the one thing many tech evangelists said they'd do—make a ton of money. Or, in many cases, any money.
You see, it's things like this that make me a bit of a techno-skeptic. YouTube and video-sharing services are revolutionary, as are advances like Twitter. But at the end of the day, they're just tools, and dependent on the extensive financial and industrial structures necessary to support them.
Occasionally, they facilitate something extraordinary. That's not to be underestimated. But just as any vision of the future can't discount the importance of technology, overestimating its impact is also dangerous. Technology, no matter how advanced, will not bring in utopia, overthrow your boss or make free, transparent societies while you sleep. It can provide significant tools to help with all those tasks, but simply making the devices won't create the change.
On a side note, this feeds into a conversation I was having with a bartender friend of mine the other night:
Him: Print is doomed.
Me: The "experts" have been saying that for decades.
Him: The New York Times will be gone in three years.
Me: They were saying that three years ago!
Indeed, print media as we know it has gone already through several deaths/resurrections, shedding its skin each time like the snake that should be its proud totem. It still has a lot of advantages that people often don't take into account and as the above article shows, tomorrow's media might not exactly be all its cracked up to be either.
That said, the hideously expensive model of giant newspapers is a dinosaur. If my own experiences on the front lines are any indication, news media's best way forward is to evolve into a hybrid, with print, blog, social networking and video functions. The leap is to view the business not as delivering a newspaper, but delivering news.
More on this later, but that's just some thoughts to chew on for now.
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