youtube-logoYouTube has become a monster in terms of traffic and made many a video exec green-eyed with envy but despite the volume of users and streams, YouTube continues to burn a $500 million + hole in Google’s coffers, hell $300 million in streaming costs alone. Advertisers won’t touch it with a barge pole as they don’t want to be placed next to content that could be anything from cats climbing curtains to something altogether more nasty. Deals with Disney for some short-form content may start to turn the tide but the flow in other direction dwarfs it by a thousand fold.

What doesn’t bode well for Google and YouTube is the fact that the content they want to move into YouTube will costs a fortune and reinventing a brand such as YouTube is even harder than starting a new one, which is expensive as well. Hulu is moving beyond US borders and has built an attractive model. If/when the ad market firms up and finally moves from TV to online in a major way, Google could find itself with an expensive bloody nose. What’s worrying for Google is that while it has the finest engineering brains in the world, what it doesn’t have is genuine soul and design.

My gut feel is that YouTube could find itself number two in many markets with the wrong model, the ‘wrong’ audience as far as the money is concerned and facing an uphill struggle. For the first time, Google may well have to have a long look at itself realise that this specific party could be over or more accurately they’ve turned in up in fancy dress to a black tie event.