blog： Politics and Bandwidth
The YouTube business model is famously problematic–the more popular you get, the more money you’re forced to spend on bandwidth. The Chinese online video industry is more treacherous still–the bandwidth is several times as expensive than it is elsewhere because the government limits competition, the content is tightly regulated, and Beijing can at any time meddle in your business, if not shut you down altogether.
So how can Victor Koo and Gary Wang of YouTube’s Chinese doppelgängers, Youku and Tudou, reasonably expect to turn the profit that eludes the Google ( GOOG – news – people ) adoptee? It is not yet clear that they can, as they have raised $165 million from investors between them so far and have burned through a good chunk of that cash already.
But in at least one way they’ve advanced beyond being simply YouTube clones: Since last year Youku and Tudou have been driving customers to professionally produced long-form content on which they can sell advertising in the fashion of Hulu.com, a strategy that so far has not worked for YouTube. (Hulu is a commercial joint venture of General Electric ( GE – news – people )’s nbc and News Corp. ( NWS – news – people )’s Fox; the service is not yet offered outside the U.S., and YouTube is blocked in China.)
