The Cost of Social Technology – Part 1 of 2

The Cost of Social Technology – Part 1 of 2

Today, even during a recession we’re pampered with amenities enabling us to keep up to date with each others goings on. Mobile phones adorn almost everyone’s pocket and high speed broadband is the norm in most households. Social networking sites such as Facebook and MySpace as well as other file sharing websites such as YouTube and Flickr are some of the most visited sites on the net. Now, mobile computing and mobile broadband are becoming a more and more common trend as people want to stay connected whilst they move around. But what’s the real cost of the all?

Did you know: YouTube is the world’s 2nd largest search engine after Google?

Surprisingly, companies such as Facebook and YouTube are set to lose big money this year, the latter an estimated $ 470 million. Companies benefiting from user-created content or Content 2.0 generally look to monetize via advertising, but at the end of the day if you’re on YouTube looking at your Uncle Joe dancing at a wedding party, your not going to be that receptive to ads – and nor are the advertisers, who need their ads targeted to make it worthwhile for them. At the end of the day, that is their true customer and clientele not the visitors. Unhappy advertisers, unhappy balance sheet and unhappy shareholders.

Think of it as a newspaper again. Readers are allowed to comment, post their view, videos and have it distributed to every other reader in the world. The difference is it’s online which although you don’t have to cut down (sorry, recycle) trees, print and distribute the content you do need to be able to stream videos fast to the users which requires a massive bandwidth. This is what costs YouTube the bulk of it’s $ 700 million expenses per annum.

Google, the search engine giant purchase YouTube a few years back, but the investment has yet to do much except give it a half billion dollar whole in the bank every year. So what can they do about it? Well, there are several options:

1) Cut out user generated content, leaving the monetizeable professional content

2) Move to a subscription based service

3) Selling YouTube

The former may well destroy the whole point of YouTube and would create uproar amongst many online communities. Indeed it could simply turn YouTube into one big advertising channel which will probably kill it’s traffic.

The second option does seem to make sense, especially for the members who upload videos. A small membership fee per annum, say $ 2-5 would put YouTube in the black whilst keeping disruption to the minimum. Incidentally, it could also help improve the quality of content since people would think twice before uploading if it cost $ X amount to distribute the content.

The latter doesn’t solve the problem; it merely offloads it to someone else. It is also unlikely to help boost Google’s balance sheet. The value of YouTube has certainly diminished since Google bought it, but depends on what a buyer reckons they can do with it.

Part 2 is to come next month on ezineseeker – keep up to date! Also available in our June newsletter, The Eee-zine. Netbook News, Exclusive articles, bargains and discount codes as well as updates on the One Laptop Per Child Foundation. You can subscribe here: http://www.mini-laptops-and-notebooks.com/The-Eee-zine.html