Online videos king web portal YouTube Inc.'s losses have been overblown by some analysts, but corporate parent Google Inc. doesn't mind the misperception, according to a buzz in the air.
Technology consultants at RampRate Inc. project YouTube's operating losses this year at $174.2 million — far below the $470.6 million estimated by Credit Suisse analysts Spencer Wang and Kenneth Sena in an April research report that became a hot topic on Wall Street and the Internet. The dueling forecasts are the latest twist in a guessing game that has intrigued investors since Google bought YouTube for $1.76 billion in late 2006. Although YouTube has become an even more popular diversion since the Google deal, it still hasn't proven it can make money. Google has acknowledged YouTube isn't very healthy project but still Google has not planned to sale it out. And Google has little incentive to set the record straight about YouTube's actual losses, according to RampRate, which specializes in managing technology costs.
RampRate reasons the perception of large losses at YouTube helps Google negotiate more favorable contracts with movie, TV and music studios licensing their video. What's more, copyright owners also are less likely to go to court in pursuit of unpaid royalties and damages if they believe YouTube is a big money loser, according to RampRate's thesis.
"Google is no doubt thrilled to let YouTube be known as a financial folly," RampRate's report said.
YouTube spokesman Aaron Zamost wouldn't comment directly on RampRate's report, but he stressed that Google has been running ads near or in millions of videos in an effort to curb YouTube's losses. He also said Google had little incentive to magnify its losses because YouTube shares revenue with its business partners.
I personally think Google Inc, is the biggest entrepreneurial example in the world. It looks impossible that Google just sell it out, the most popular video sharing website. May be, they will change some terms and conditions, patterns and technologies being used on youtube to energize it !
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Tech blogger
Hassaan Khan
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