Estimate cost of running Youtube
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in Estimation by (21 points) | 303 views

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Clarifying questions:

1) Is this specific to any location? [Answer] no, everyone

2) Do we want to include all costs such as operation and marketing? [Answer] yes, all costs

The main types of costs with running YouTube are infrastructure costs (including servers, storage, data transfer), development costs to maintain features/updated and marketing costs.

The high level formula I'll be working towards is SUM (Infrastructue costs, development costs and marketing costs). I'd also like to break down the cost/user.

The formula there would be: Cost per user = Sum ($ infrastructure cost/ # of YouTube users, $ development cost / # of YouTube users, $ marketing cost / # of YouTube users)

First, I'll tackle figuring out the number of YouTube users. I'll take a top down approach. I know there's about 7 million people in the world. Out of the 7 billion, YouTube has a largest market share of users when it comes to video streaming/watching. So I'm going to estimate about 20% of the worlds population uses YouTube. 7 billion X 20% = 1.4 billion users. For the sake of having nice numbers, I will round that to 2 billion users.

Next to estimate the infrastructure cost. I'll use YouTube premium's cost to estimate how much infrastructure costs are. It's a shot, it might not be an accurate one. So I know that a YouTube premium account is $18/month for 5 people. This means per person it's $3.6/user / month. In a year, that is ($3.6/user)(12 months) = $43.2/users

Development costs - I'll estimate there are 200 developers on the YouTube team who makes about 200K/year. Which gives us (200 developers)(200k/year) = 40,000K = 40 million. The development cost/users = 40M/2B = $0.02/user.

For marketing costs, I'm assuming YouTube has a lot of marketing behind it. At least 10% of Google's revenue is spent towards marketing. I'm going to assume YouTube gets 2% of the 10% because of the amount of usage on YouTube. If Google's revenue is 80B (assumption) then 10% of 80B is 8B. 2% of 8B is 16M. To find the marketing cost/user I will divide 16M / 2B = $0.06/user.

In total the cost per users is: infrastructure cost ($43.2/user) + development cost ($0.02/user) + marketing cost ($0.0.06/user) = $43.28/user.

In hindsight, that number seems fairly high. I would revisit the infrastructure cost. YouTube premium's pricing might not be the right baseline. Another baseline i would estimate with would be the pricing of AWS which is $10/month for 20 users. Using that it would cut down infrastructure cost to ($10/month)(1/20 users)(12 months) = $6/user.
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