Why Youtube pays so much for bandwidth? Two mysteries behind YT

Youtube allows users to upload their videos and allow others to download them without restrictions.

Youtube has only recently placed advertisements on its website but even that might not be sufficient to recoup the cost of maintaining such a startup.

The flagship of the Web 2.0 era has managed to attract more than 10 million unique visitors per month since the beginning of 2006.

Videos are the most bandwidth hungry applications around and this explains why bittorrent technology, which uses the untapped upload bandwidth of users to move large files around, has been so popular in the past few years.

Forbes published an article back in April, which gave two interesting figures on the cost of running Youtube. They raised $11.5 million in Venture Capital money and their monthly bandwidth costs (excluding other expenses) has reached $1 million for approximately 6 Petabytes of data transferred during the same period.

6 PB is six million gigabytes or the equivalent of 1.25 million DVDs downloaded. This means that the price at which Youtube buys a Terabyte of bandwidth is $167. In comparison, 1&1 Internet sells one Terabyte of bandwidth for $9.99. That is the first mystery.

The second mystery has to do with the fact that it would have cost them much less money in terms of bandwidth cost to develop and use a variant or derivative of peer to peer technology since their users are known to be faithful and wouldn't probably mind installing a Youtube P2P client.