You're assuming that people are willing to pay for your product up front for 12 months. If your price point is so small that an annual subscription is under $20, then it doesn't really make sense to charge monthly. I was speaking mainly for higher priced items.

Both are good points, would definitely like to see more research on the topic. I definitely agree there is a threshold when it comes to monthly vs yearly. I know you just tossed out a number but $20/year seems a little lower than I was thinking.

Strange that no one is ever commended for preventing a failure, only attacked when one occurs.

that's exactly the answer I was looking for. Thank you.

$10 - $30 yearly. Of course if I worked at a company that used this (like a sales organization) I would probably have a whole ton of licenses.

Lots of people want YouTube and it is on track to lose nearly $500 million this year. The fact that Google bought it doesn't mean they've created a business.

Build something people want. That's not good enough.

Build something people will pay for. That should imply enough want and will keep you around long enough to keep providing it.

"The fact that Google bought it doesn't mean they've created a business."

A business can lose money and still remain a business, even a great one. Companies go public all the time while in the red.

And that $500M figure you have for YouTube is the epitome of fuzzy-math.

Amazon.com lost money for 7 consecutive years before first posting a profit in Q4 2001.

That was all part of the business plan though - there was a light at the end of the tunnel, and they knew what it was. Whereas I don't think anyone knows how to make money off of YouTube.

"In June 2008 a Forbes magazine article projected the 2008 revenue at US$200 million, noting progress in advertising sales."

We know two things for sure: a) youtube IS making money b) youtube is making money in tens of millions.

What we don't know--and what makes the argument that YouTube is a financial burden on google very difficult to prove--is the knowledge of YouTube's expenses.

Build something someone will pay for.

I always notice people seem to read this book and assume that it's an instructional manual on how to live. It's just making points about the fundamentals of power.

I think it's a travesty that he was beaten down so bad by the negativity that he had to leave in the first place. This wasn't a vacation, it was a retreat - for the wrong reasons.

I love how people confuse "selling to Google" with a viable business.

Just because you sell the company (YouTube) doesn't mean the business was successful. It just means you've handed the loss to another company.

The reality is that the Web is so big now that you can start smaller firms for next to nothing in lots of niche markets. That doesn't mean VC is broken, it just means that smaller firms can exist without it. You're not going to start Amazon or NetFlix without follow-on capital. You can start a Web gadget company that makes $50k just fine though.

Agreed. Part of what I'm wondering is how viable the venture model is when the amount of revenue a category can generate gets quickly reduced from a free competitor that can operate at a fraction of the cost.

That's why I mentioned PlentOfFish. Probably not the best example, but if they are doing $10m as one of the leaders in the category, that doesn't spell a great future for others in the classified dating model. There are only so many of those major categories (like jobs, autos, dating) available.

The other trend is that advertising just doesn't pay the bills, even in mass amounts. I'm familiar with a handful of private companies that are doing millions of uniques per month and can't even pay a modest staff and support cost to stay afloat. The idea in the past was that with enough traffic the ad dollars would pay for free, but even that's not entirely working.