(cc) by jonsson/flickr

If you were wondering what the recent spat between YouTube and the UK music industry association PRS was all about, look no further than the announcement today from Google about how much money YouTube is losing. Hint: it isn't a small number!

On earnings of $240m, they've managed to lose $460m by spending a whooping $700m in costs. Possibly the strangest part of the sums is that they put $360m down to bandwidth expenses. We know that streaming video is mighty expensive, and that YouTube foots the bill for anyone and everyone to share footage of their cats doing somersaults, whilst making money from advertising on a tiny fraction of their content.

But the big question in my mind is how they managed to spend the other $360m? The relatively minor updates they've made can hardly account for this in development costs. Not can I imagine advertising the service or junkets for the press or potential partners could rack up this bill. It's possible they (notionally) charge internally for placements on Google's other pages, so they've racked up a whopping advertising bill, but only from one part of the massive conglomerate to another.