Despite having more than one billion monthly users and near dominance with regards to online videos, YouTube isn’t making any money.
In 2014, YouTube posted around $4 billion in revenue, approximately 6 per cent of Google’s overall revenue, the video sharing website didn’t actually contribute to Google’s earnings, reports the Wall Street Journal.
The main reasons behind this are said to be due to how users visit the site, with most users accessing YouTube via direct links to videos, rather than entering via its homepage, where Google could charge premium advertising rates.
The other reason, and perhaps more surprising, is that according to the WSJ, YouTube doesn’t have a very wide reach with sources estimating that around nine percent of of users account for a staggering 85 percent of video views.
Whilst revenue of $4 billion may sound like a lot but compared to other popular websites, it is far from impressive. Take Facebook, which attracts a similar amount of monthly visitors, as an example: the popular social network made $3 billion profit from $12 billion in revenue in 2014.
Google bought YouTube for $1.65 billion in 2006 but the site didn’t really start generating revenue until the inclusion of skippable advertisements which appear before a viewer watches a video.
Google is hoping a new music subscription service, more targeted ads and an increase in producing its own original content will help to make YouTube more profitable.
Source: Wall Street Journal
Jonathan is our Google Nexus and Android enthusiast. He is also fanatical about football which makes it all the more strange that he should support Stockport County. In addition to writing about tech, Jonathan has a passion for fitness and nutrition and has previously written for one the UK’s leading watch and horology websites.