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When is an asset not an asset? When it’s YouTube

Alan Patrick succinctly points out why referring to YouTube as an asset for Googleis wide of the mark:

“A small quibble, if I may – words like Asset, and Value, get badly diluted in Newspeak 2.0. These words’ original meanings are based, however, on the basic principle of gaining positive returns at some point. Being important by dint of massive subsidy is, well, its an approach, but its not sustainable, its not creating value at that point, and as for counting it as an Asset – accountants define an asset as something that gains, not loses, a business money.”

Exactly. YouTube continues to lose money. The more popular it gets, the more money it loses. And that means that rate at which Google has to increase its revenues from YouTube is constantly increasing too.

So, while Google may indeed carry on increasing revenues from YouTube, unless the growth in revenue exceeds growth in traffic (at a healthy level, too) it will continue to be a financial black hole.

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