🎥 Does YouTube make a profit?

I researched this topic, but couldn't find an answer.

While browsing YouTube this week, I noticed some random videos that were not at all useful, but engaging to say the least. People playing Chrome Dinosaur Game for a year, a live train camera sitting at a junction, looking at trains passing by for hours, a video comparing PewDiePie and T-Series and many, many more!

These videos, while useless in most contexts, had me engaged. You can watch these videos for at least five minutes.

While thinking about these videos, I started researching about the costs that YouTube has to bear to let you upload these videos for free. It seems mind-boggling that someone else has to bear such a high cost of making a live-stream available for users. I read up online to see if there is any white-paper or an article that describes storage of video on YouTube.

But, I was able to learn something very interesting.

Until 2009, the industry was looking at YouTube as a doomed product. It was losing money in a crazy manner. The costs of storage were very high. But Google had different plans. After the acquisition of YouTube in 2006, Google has revolutionized the product to keep it up and running. While it is hard to determine for outsiders if YouTube actually makes a profit, this article gave a good background about how YouTube revolutionized Web Video.

This led to another question in my mind. With all this content on YouTube, is there a lack of content that it has to produce its own content for premium services? Also, looking at the way YouTube is trying to monetize content on its site, it feels like getting revenue directly from users might be a promising area for growth. The launch of YouTube Premium, YouTube Red and YouTube Music to compete with independent services like Netflix, Spotify, etc. is a move away from advertising, its core business. Thus, I hypothesize that advertising might not be able to sustain the business.

How does advertising on YouTube work?

Advertising on YouTube is based on a cost-per-view model, meaning every time you watch an ad, an advertiser pays YouTube. YouTube shares a part of this revenue with the video’s creator, which has led to a booming creator ecosystem, about which I have written in the past.

So many questions…

The more I think about it, the more curious I get on the economics of YouTube video. As you may have noticed through this article, there is a lack of clarity around how YouTube is growing so much. Is it growing profitably?

What is the cost of storing a minute-long video on YouTube? What would happen if YouTube started asking creators to pay it for uploading videos?

These are just some of the questions that are burning in my mind as I think about YouTube. Does any of you have an idea about any of these? Please reply to this e-mail and let me know.

In the last e-mail, I had mentioned I will write about WhatsApp this week, but these questions about YouTube were too hard to not write about and share.

Please, please share this post with people who might have answers to these questions, as that might help me understand YouTube better.

If you have feedback about this post, reply to this e-mail.

Thanks for reading :)