In a report issued this week, Credit Suisse projects that YouTube will lose $470 million this year, while raking in only $240 million in revenue. Since Google ponied up $1.65 billion for YouTube more than two years ago, YouTube doesn't face the same financial pressures of a typical technology company, as long as Google's willing to underwrite YouTube's losses. Still, their progress does speak volumes about what happens when you put a platform ahead of a business model.
PR pros and other communications professionals looking for help in deciding where to place their marketing money and effort would be wise to remember that the notion that you can build an audience first and worry about your business model later generally hasn't worked out too well historically. Just because Twitter's a media darling today doesn't mean it won't be gone at some point in the future.
I was surprised to finally see a negative -- or realistic, depending on your take -- column on Twitter that ran this week on CNET's News.com penned by Charles Cooper. Basically, Cooper said while the rest of the media world may continue to fawn over Twitter, he's going to take a vacation and wait for Twitter's co-founders to finally cement a business model before joining the crowd singing their praises.
Like Cooper, I'm generally advising all my clients to put their time and effort into social media platforms and tools that are based around a solid, quantifiable business model. Quite simply, if the platform you're banking on hasn't figured out how they're going to put money in the bank over the long term, it's not worth the majority of your time and effort at this point.
Twitter may indeed go on to become a true sensation that changes the way we communicate, but it's important to remember it may also become another WebTV; there's $425 million Microsoft would likely love to have back.
1 comment:
Cyrus, I hear what you're saying. And it certainly makes sense from an investor point of view. I wouldn't invest dollars in Twitter or any social media platform, for that matter, unless it could show real money-making potential.
Having said that, I would invest time and energy to utilize Twitter and other social media platforms - even if the long term prospect is not certain. Why? Because in the short-term, it is where the people are congregated.
I recognize that my plans may change if things change with a particular platform. That, however, is true of any aspect of business. Things are in constant change and this is no different. Therefore, so long as I as a user and marketer, can benefit from a platform, whether the platform owner is making money or not is not of interest to me.
My investment is the money associated with time and energy. If my return, in whatever form I choose to define return, meets or exceeds that investment, I'm in.
I'm definitely not out there telling people Twitter or Facebook or whatever is the end all. I am however, taking advantage of opportunities that make themselves available.
Good post.
Jesse Torres
http://socialmediabanking.blogspot.com/
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