Can you make money with a Social/User generated content Site?

I was reading this article from Slate about user generated content and the cost of running “social” sites or other sites that contain user generated content. I’ve always wondered about the costs of running something like YouTube or Facebook and how exactly do they pay the costs of running the site.

A fun exercise is to take the content that you generate and cost it out, obviously we’re buying bandwidth in small quantities so its going to be expensive, but think about the costs.

For example I have probably taken about 5000 photo’s over the last 3 years (I love digital camera’s) and on average I would say those files are about 7MB each (JPEG taken on a 8MP or 5MP camera.), obviously if I was using newer camera’s thats going to be alot higher. I’ve probably taken about 300min of video too on various low quality camera’s (probably a bit low for the average youtube geek) which lets assume on a low quality camera (not HD) with some good compression comes out 10MB/min. I might of generated about 120min of Mp3 compressed audio which we’ll assume is stored at 1MB/min. I’ve probably written about 50MB of text and code over the last 3years (might be a bit high, but I’m talking about pure text no binary files).

So lets add that all up:

5000 pictures * 7MB = 35000MB
300min video * 10MB/min = 3000MB
50MB Text / Source etc.

That comes to a total of 38050MB or +/- 35GB (assuming 1024MB in 1 GB)

I don’t consider these numbers too far out, I think alot of people on Facebook probably do alot more than this over a 3year period. Now the next exercise is we’re going to host this using US hosting via the hosting company that is hosted at the moment, please remember that if you’re buying in bulk it would be alot lower than this but for this exercise it’ll do.

The only hosting option on there site that has enough storage space to host this is a dedicated server which cost R2279 ($250) a month to host and buys you 1500gb a month of bandwidth. Now lets assume that I have 200 friends/family/visitors that come to my website in a month and each views about 10% of my content that would add up to 700GB of traffic (+/-) a month, which is just less than half of the amount of my available bandwidth.

10% is probably rather high, but I might get alot more visitors to my site than 200 considering even this site gets about that many visitors in one month.

By the way I’m not going to even bother doing the sums if it was hosted in SA at about R0.17/MB and only 30GB included in the basic fee it becomes extremely expensive to host it in SA. (R 255897.60 [$28600] +/- per month to equal the US hosting.)

Now imagine that my brother, my future wife, my future sister in-law and a few of my friends joined me on this dedicated server with there content of the last 3 years and you’ll see that we suddenly hit the limits of our hosting plan and would need to upgrade to something bigger and better.

None of this takes into account that my movie clip of me singing ‘My Way’ on the stairs to my Fiance’ after having 1 too many Margarita’s may end up becoming a huge hit and get me 100 visitors to the site a day, or that a series of pictures taken of me in a towel makes me the most downloaded guy on the net.

I doubt very much that Google AdWords or any other form of advertising will be able to pay for the running costs of the site, let alone the cost of the development of the site or maintenance of it and the server to ensure its available 24/7.

Obviously this isn’t exact and is based on some thumbsucking and in the volumes of bandwidth we’re talking you could get things cheaper but still this is not too far fetched for a very basic Facebook/YouTube/Flickr etc competitor.