YouTube serves 100m videos each day

The big news of the morning is that YouTube has announced it’s hit 100 million videos served per day. Founded in early 2005, the company has raised at least $11.5 million in venture funding from Sequoia Capital. It’s one of many startups offering video sharing services, but for some reason now has an incredibly dominant position. This weekend’s announcement said that 60% of videos watched online are now served up by YouTube.

How did this happen? Being an early mover into MySpace via embeded flash may have helped. The social features, recently added by Google Video as well, could be a winning combination. The smart branding via a catchy URL, simple as it sounds, may have helped as well. Partnerships with NBC and a variety of other content producers may have helped – though these are most likely a consequence of the site’s popularity far more than a cause of it. It’s hard to say just why YouTube has caught on and other services have not. It just might be that YouTube is simple, easy, works well enough and people like it – there may be no more mystery than that.

A key question that remains unanswered of course is whether the service will succeed financially. Forbes estimated that bandwidth costs were approaching $1 million per month in April, when YouTube was reported to have been seeing 12.9 million unique visitors per month (March). Three months later that number is reported to be approaching 20 million unique visitors per month.

A single banner ad above each video seems highly unlikely to raise a substantial amount of revenue. It’s hard to imagine that paid partnerships on a site based on free, user uploaded viral videos are going to raise substantial revenue. Presumably there will need to be more advertising added in the future. Whether users will accept that or jump to another video sharing service may be the key question. Is mass adoption of new social web services contingent on free riders resistant even to advertising? I don’t think so, but we will have to wait and see. Something is going to have to happen or YouTube is likely to become a poster child for Bubble2.0, an era when companies floundered not because of lack of users but lack of a viable business model.