Forbes.com has a good article on the difficulties of scaling up online video distribution, with You Tube reportedly spending $1M/month on bandwidth alone while still waiting for advertising revenues to ramp up.

Startup of the moment YouTube, which garnered 12.9 million unique visitors in March, doesn’t care what viewers watch, as long as they keep tuning in. Making money is another matter: The site, which has raised $11.5 million in venture capital in the last year, didn’t see a penny in revenue until March, when they cautiously began selling ads. Meanwhile the site’s bandwidth costs, which increase every time a visitor clicks on a video, may be approaching $1 million a month–much of which goes to provider Limelight Networks.

Internet optimists predict that online video, long-rumored to be the next big thing, is finally taking off: IDC estimates that video generated $230 million in revenue in 2005 but will jump to $1.7 billion by 2010. In the meantime, the best play in Internet video may not be the companies that show off the clips, but the ones who deliver them to users’ PCs.