Justin.tv for iPhone Racks Up 355,000 Downloads in First Week
mashable.com
mashable.com
The decision to make it free was a result of the market (how much other apps cost) and our goals (revenue, usage, branding, growth, etc).
About being cost effective. You highly underestimate Google/YouTube's ability to throw money around with no short-terms shavings or profit interest.
The only legitimate reason thats preventing YouTube from rolling out streaming (that I can think of) is having an effective way of preventing adult and copyright material streaming, which is quite common at justin.tv (I would argue that it is the main source of their traffic).
You can only do so much with software, you probably need manpower to continuously monitor and prevent illegal activity, which is happening live. The problem is not technical, the problem is legal and management.
I predict YouTube Live stream for all will happen sometime before the end of this year.
I think they are relying on Akamai till their own setup is ready to go. I think the argument that Youtube don't/can't have live streaming infrastructure is quite silly.