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My "remaster" of this diff.
[edit] Economics of YouTube
Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month. Some industry commentators have speculated that YouTube's running costs &mdash, specifically in regards to the required bandwidth &mdash, may be as high as 5 to 6 million USD per month[1] This high operational cost fueled criticisms that the company, like many Internet startups, did not have a viably implemented business model.
As advertising is YouTube's central mechanism for gaining revenue this issue has been analysed by many authors[2][3], with differing interpretations. Some authors argue that YouTube's free content provides a vehicle for enlarging the companies userbase upon which revenue from advertising and premium services can be obtained, without the need for direct control of the content itself[2]. Futhermore, companies relying upon user-based content can utilise their userbase to provide value creation, with the result as an economic democracy.
Alternatively some analysts state that this model is a form of expoitation of the userbase, whereby labour costs are reduced through Internet based global outsourcing. The company offers its userbase to third parties, such as advertisers, in exchange for revenue. As the company expands its user base it can increase the revenue rate from this source. Effectively the audience is sold to the companies advertising customers. This form of exchange can be obtained through the companies "gifts" offered to its userbase, until the advertising rate is sufficient to sustain profit.[3]
