That’s Money in 2.0 - Part I

Many have suggested that Google overpaid for YouTube, with the price tag of $1.65 billion. Others are speculating about why Conde Nast bought Reddit and what the price tag is – but wondering if it’s worth it, given that Reddit doesn’t seem to have a revenue stream other than the store. Do people really donate, or buy the stuff on offer, in sufficiently large numbers?

It isn’t necessary. There’s a great deal of money to be made and being made in Web 2.0 – which is why you’ll see both the rush to set up and the fancy acquisitions. While there could be a bubble buildup, we aren’t anywhere near it yet.

Hipmojo has an interesting analysis on YouTube’s revenues; estimates that YouTube should be making profits of at least $5 million plus per month. The numbers don’t seem to be out of the ballpark, so that straightaway makes it worth quite a bit.

Now add to that, the potential growth. I haven’t found any estimates of the number of users – but if you go with the 100 million pageviews per day quoted, and assume an average user might view 5 pages at a time, that’s 20 million users. Maybe each user doesn’t visit every day, so you need to up the number – 40 million, 50 million users?

It doesn’t matter – because apparently, nine months ago, YouTube was at about 1.7 million pageviews per month. That’s less than 60,000 a day. Given the growth rate inherent in the 60K to 100M transition, there’s still some way to go before the growth levels off. And with over 1 billion internet users, there’s still a sizeable population that doesn’t currently use YouTube. And they might.

Now add to that, the possibility of selling video content – either pay per view or download. Itunes has already crossed 700 million downloads, and growing faster by the day – if you use that as a benchmark, and a 10 cent earning per download, that’s $70 million.

Sounds interesting ? But every Web2.0 site isn’t YouTube, so is it still worthwhile? Stay tuned for the next post.