YouTube turns 5: still waiting to be Google's killer app

2 billion. That's a big number. 2,000,000,000. As Google points out, that is significantly more traffic than US broadcast television networks get, although Americans continue to watch much more television than YouTube in total hours. However, as Internet-connected set-top boxes begin to emerge and people begin consuming more media via their computers and other converged devices (the iPad, for example), YouTube is poised to scale even further in usage, stickiness, and even profitability.

Google has said repeatedly that it expects YouTube to actually be profitable this year. It's hard to believe that any service with YouTube's traffic still isn't making money, but Google (and YouTube's competitors) have struggled to monetize video services. How, for example, do you sell ads to companies gunshy about selling their products next to Lady Gaga's "Telephone" video? And how do agencies, individuals and organizations who build their brands around and with their YouTube channels respond to ads on their pages?

Now that YouTube channels are gaining popularity and YouTube is automatically handling voice recognition on uploaded video, keyword ad targeting may get a lot easier, but YouTube still faces significant challenges in the context of Google's traditional ad-based revenue scheme.

On the other hand, YouTube is largely unsullied by any of Google's privacy concerns and is so dominant in the industry that it has few real competitors (at least in the consumer upload and YouTube channel spaces). There is a reason that Google spent 1.65 billion on the property three and half years ago. The potential to make money on this platform is so extraordinary, that one has to wonder how much Google's other businesses (aside from straight search) will even matter long term.

As Google continues to clean up copyrighted material in the videos on YouTube and negotiates content deals with studios and content producers to take on Hulu, Netflix, and Blockbuster, monetization outside of search and ads becomes even easier.

Google Apps faces an uphill battle (I'm linking here for perspective, not because I agree with Zack - I'll deal with him later). Google Books is mired in legal wrangling. Google keeps stepping in privacy landmines with StreetView, Buzz, and even search history. YouTube, however, is a potential cash cow nearly at the tipping point of online media dominance. 2 billion quick hits a day is only scratching the surface of what it will be, assuming Google can aggressively address copyright and DRM issues.