Slashdot Mirror
2010 May Be the First Year YouTube Turns a Profit
eldavojohn writes "Analysts are saying that this year will be the first year YouTube turns a profit. From the New York Times article: 'In the last year, the video site has become a significant contributor to the family business at a time when Google, which makes more than 90 percent of its revenue from text search ads, is seeking a second act. Though Google does not report YouTube's earnings, it has hinted that it is hovering near profitability. Analysts say YouTube will bring in around $450 million in revenue this year and earn a profit. Revenue at YouTube has more than doubled each year for the last three years, according to the company.' Of course a little over a year ago we were being told that YouTube was losing around $1.65 million each day. Regardless, when you pay $1.65 billion for a business, you probably don't expect it to take three to four years before you start making your money back."
This is why google is eating everybody's lunch. Thinking this far is a good thing when you are able to double revenues year over year. Not a bad long run strategy.
In the .com error days, people valued money-losing Internet companies as if they would gain market share and be able to raise prices in the future. Most failed at doing that, and the bubble burst.
But Google has this insanely profitable AdWords business, and therefore can fund a money-loser and work the ads in slowly... which is exactly what they did with YouTube. Look out phone companies, you're next.
It's not like Google didn't know what they were getting themselves into. I'm sure they're doing just fine over there.
The World Wide Web is dying. Soon, we shall have only the Internet.
I run linux so I can't use itunes, which partly blocks me from buying music on line. Lately if I want to listen to a track I search for it on youtube and watch a video. Once a week I seem to spend an hour or so clicking through links from one video to another. Youtube has a fantastic collection of early Kate Bush demo recordings.
I bet they charge a lot of money for targeted adds on videos. Google knows my wife wants to buy a new car...
http://michaelsmith.id.au
I assume that profit is "revenue - operational cost", i.e. "advertising - server farm".
That's very different from "getting your money back".
While It might be old school dot com to start a business and "try to lose as much $$ as possible" it's clear that Google through YouTube has created something very valued, given the reach and impact YouTube has. What remains to be seen is through Google TV and other technologies can they bring this video from the desktop to the set top?
Also interesting will be to see if they can get as much corporate content as they already have consumer content. They did do away with Google Video service..
I would love it if YouTube/Google/Google TV was my one shop stop for searching on video content and then let the technology figure out how best to view it; also figure out the cheapest way. For example I subscribe to HBO on demand but on my cable box when I search for movies they will charge me for watching these movies unless I come in via the HBO interface.. I need a video search service that is looking to minimize my expenses not increase them.
http://www.hawknest.com/
Strangly this coincide with the year of linux on the desktop. So it must be due to all the new linux desktop accessing youtube.
Youtube is just a couple more Bed Intruders away from profitability.
Make everything as simple as possible, but not simpler. - Albert Einstein
The main point of the article is how Youtube is enabling a shift in how copyright holders deal with unauthorized content. They scan new videos for content matching that provided by content owners and split ad revenue with them. It's certainly less confrontational than DMCA takedown notices, but I imagine it's full of gray areas: what if the video I upload uses 15 seconds of a music video for commentary but is otherwise 9 minutes of my own contribution? Does Youtube still show more-than-usual ads and split the revenue with the artist?
Is there any way we can reliably well which videos have this revenue sharing? Some things are obvious - official music videos often have more ads and big "VEVO" logos everywhere. But how about these user-uploaded videos?
"The universe seems neither benign nor hostile, merely indifferent." --Carl Sagan
The main point of the article is how Youtube is enabling a shift in how copyright holders deal with unauthorized content.
Disclaimer: Summary author here. Honestly, wasn't too interested in that. YouTube's been auto-recognizing songs and videos through fingerprinting for quite sometime now and making an ad for the song pop up at the bottom of the video because you don't own it. I saw this with my friend's account as early as 2008.
;-) good luck!
Neat trick but not really fresh news to me. And you know, I read the article and the only thing that caught my eye was that YouTube might be turning a profit this year. I thought it was more newsworthy than your summary and -- frankly -- I get annoyed and feel like I failed whenever I post a summary and someone screams "slashvertisement" and gets modded +5 Insightful. That really does get to me. So instead of gaping in awe at how awesome they are at scanning your videos, I went with the profit angle. Especially since people have been so mixed on whether or not YouTube was a smart play by Google. Viacom trial lawyer fees aside, it's not a cheap outfit.
You'll just have to beat me to the scoop next time
My work here is dung.
"Regardless, when you pay $1.65 billion for a business, you probably don't expect it to take three to four years before you start making your money back."
Once again, it's pretty obvious that the summary writer (like most slashdotters) knows roughly fuck all about business. Taking three to four years to start earning your money back is neither new, nor unique to Google, nor even notable.