I love being reminded of the history of economic thought:
It seems safe to assume that YouTube’s traffic will continue to grow,
with no clear ceiling in sight. Since the majority of Google’s costs
for the service are pure variable costs of bandwidth and storage, and
since they’ve already reached the point at which no greater economies
of scale remain, the costs of the business will continue to grow on a
linear basis. Unfortunately, far more user-generated content than
professional content makes its way onto the site, which means that
while costs grow linearly, non-monetizable content is growing
geometrically as compared against the monetizable content that YouTube
really wants and needs to survive. This means less and less of
YouTube’s library will be revenue-contributing, while the costs of
delivering that library will continue to grow.
The article is interesting through and the hat tip goes to Andrew Sullivan.