How Does You Tube Make Money?

[richardbhullar]

i was just wondering how you tube makes money, is it just the advertising, or im not sure, can anyone help me

[stand856]

once gootube kicks off their ad campaign, they'll be profitable

[Envydia]

I think maybe word of mouth and advertising

[JohnR]

YouTube is a video-sharing website on which users can upload, share, and view videos. Three former PayPal employees created YouTube in February 2005. In November 2006, YouTube, LLC was bought by Google Inc. for $1.65 billion, and is now operated as a subsidiary of Google. The company is based in San Bruno, California, and uses Adobe Flash Video technology to display a wide variety of user-generated video content, including movie clips, TV clips, and music videos, as well as amateur content such as video blogging and short original videos. Most of the content on YouTube has been uploaded by individuals, although media corporations including CBS, the BBC, VEVO and other organizations offer some of their material via the site, as part of the YouTube partnership program.

YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal. Hurley studied design at Indiana University of Pennsylvania, while Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign.

According to a story that has often been repeated in the media, Chad Hurley and Steve Chen developed the idea for YouTube during the early months of 2005, after they had experienced difficulty sharing videos that had been shot at a dinner party at Chen's apartment in San Francisco. Jawed Karim did not attend the party and denied that it had occurred, while Chad Hurley commented that the idea that YouTube was founded after a dinner party "was probably very strengthened by marketing ideas around creating a story that was very digestible."

YouTube began as a venture-funded technology startup, primarily from a US$11.5 million investment by Sequoia Capital between November 2005 and April 2006. YouTube's early headquarters were situated above a pizzeria and Japanese restaurant in San Mateo, California. The domain name YouTube - Broadcast Yourself. was activated on February 14, 2005, and the website was developed over the subsequent months. The first YouTube video was entitled Me at the zoo, and shows founder Jawed Karim at San Diego Zoo. The video was uploaded on April 23, 2005, and can still be viewed on the site.

YouTube offered the public a beta test of the site in May 2005, six months before the official launch in November 2005. The site grew rapidly, and in July 2006 the company announced that more than 65,000 new videos were being uploaded every day, and that the site was receiving 100 million video views per day. According to data published by market research company comScore, YouTube is the dominant provider of online video in the United States, with a market share of around 43 percent and more than six billion videos viewed in January 2009. It is estimated that 24 hours of new videos are uploaded to the site every minute, and that around three quarters of the material comes from outside the United States. It is also estimated that in 2007 YouTube consumed as much bandwidth as the entire Internet in 2000. In March 2008, YouTube's bandwidth costs were estimated at approximately US$1 million a day. Alexa ranks YouTube as the third most visited website on the Internet, behind Google and Facebook.

The choice of the name YouTube - Broadcast Yourself. led to problems for a similarly named website, Utube.com. The owner of the site, Universal Tube & Rollform Equipment, filed a lawsuit against YouTube in November 2006 after being overloaded on a regular basis by people looking for YouTube. Universal Tube has since changed the name of its website to uTubeonline.com Universal Tube & Rollform Equipment Corporation - Tube Machinery - Used Tube Mills, Used Pipe Mills, High Frequency Welders, Rollformer.

In October 2006, Google Inc. announced that it had acquired YouTube for US$1.65 billion in Google stock, and the deal was finalized on November 13, 2006. Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing. In June 2008, a Forbes magazine article projected the 2008 revenue at US$200 million, noting progress in advertising sales.

In November 2008, YouTube reached an agreement with MGM, Lions Gate Entertainment and CBS, allowing the companies to post full-length films and television episodes on the site, accompanied by advertisements in a section for US viewers called "Shows". The move was intended to create competition with websites such as Hulu, which features material from NBC, Fox, and Disney. In November 2009, YouTube launched a version of "Shows" available to UK viewers, offering around 4000 full-length shows from more than 60 partners. Viewers in the United States can rent full length films from YouTube, and the service is scheduled to be launched worldwide.

Starting in March 2010, YouTube started streaming all 60 cricket matches of the Indian Premier League worldwide for free, which YouTube claims is the first worldwide free online broadcast of a major sporting event.

On March 31, 2010, the YouTube website launched a new design, with the aim of simplifying the interface and increasing the time users spend on the site. Google product manager Shiva Rajaraman commented: "We really felt like we needed to step back and remove the clutter."

In May 2010, it was reported that YouTube was serving more than two billion videos a day, which it described as "nearly double the prime-time audience of all three major US television networks combined."

For more information please visit:
YouTube - Wikipedia, the free encyclopedia

[Hassman]

it is advertising yes. Now that big companies like CBS have teamed up with them so viewers constantly see their videos, right there is big money.

[RockerOB]

with youtube in google's hands, it has equalized itself with BIG money!

[sicnarftea]

adding to this, Google had introduced "video ads", if you're an adsense publisher you would've gotten a newsletter explaining it, you can also check it out in your accounts.

I am assuming this would be rolled over to youtube soon, but I am not 100% sure how. But if peopel are forced to watch like a 15second ad before each clip.. people are going to be pissed off, and I know i would be, because that is what happens with MSN videos... bloody msn forces me to watch ebay ads everytime a video loads

[NeeJam]

youtube makes money via googles ad's on the site, although i believe they are implementing a video based advertisement before the videos to bring in more revenue and to pay disney etc for their content on there too as they've been striking a few deals over that recently, i believe

[Bugman]

If an ad pops up on a video I was going to watch, I x out the whole window.

[jegan17]

It doesn't.

This is straight from Google's 10-K (annual report):

"Also, the anticipated benefit of many of our acquisitions may not materialize. For example, we have yet to realize significant revenue benefits from our acquisitions of dMarc Broadcasting (Audio Ads) and YouTube."

For those who don't speak US GAAP, this means that YouTube has not made a 1% contribution to yearly revenue to google. That is, for an acquisition of $1.5 billion, YouTube makes less than $200 million per year (1% of 21 billion their 08 revenue) probably a lot less than this but they don't break out YouTube's segment revenue.

Now, run a DCF on that acquisition.

[veikoh]

The question is actually "how does google makes money" and the answer is very simple.
1. We, Internet marketeers are doing SEO and finding interesting topics to get visitors from Google natural seraches to our site.
2. We setup a AdSense boxes to get any money out of it and selling our visitors back to Google.
3. Some idiots are paying to get visitors to their site by purchasing those links.
4. Google is taking 80% of commision out of it as from 5 cents minimum for advertiser, you will earn 1 cent if somebody is willing to click on that link.

[timboj]

youtube is 100% advertising, that is how google as a company makes 95% of their money

[woofey]

youtube make money by running ads through there video, im sure they also charge for featured videos. Don't quote me on the latter this may be false.
there are a few other good video sharing websites on the web check out woofey.com

[BarbaraKParker]

So, there are great benefits you will receive when you market your website through YouTube videos. More importantly, it gives you the benefits of other forms of advertising for free.

[Brandon Quijano]

This is the information age and google is king! Google pretty much knows everything about it's users... and therefore can target advertising based on your wants and needs. If google knows what you search for and now knows what you watch too, it can provide extremely targeted ads that are very lucrative. It's all about advertising $$$