Ben Yu
Ben Yu
Sep 6, 2017 · 2 min read

Where are you getting hard data that YouTube isn’t profitable? This is where my sources are from: http://www.investors.com/news/technology/youtube-valuation-soaring-profits-blurry-as-facebook-amazon-loom/
http://www.latimes.com/business/technology/la-fi-tn-google-youtube-20161027-story.html

“Ad-supported YouTube is a revenue juggernaut. Some analysts estimate sales will swell 30% to 40% in 2016, to about $9 billion.

But is YouTube profitable? Google has never said. Nor does it disclose viewership data or other financial metrics beyond a few broad statements.

“There’s substantial uncertainty, particularly over the profit levels at YouTube, whether it’s break-even or if they’re doing modest operating margins,” RBC Capital analyst Mark Mahaney told IBD. “They have a lot of content royalty costs, massive bandwidth costs, storage costs, processing costs.

“My guess is that with YouTube’s scale, they’re reasonably profitable, like double-digit margins, but there’s no way of knowing,” Mahaney said. He thinks investors crave a “clean look” at YouTube’s financials.

Bank of America Merrill Lynch last year valued YouTube at $70 billion or more. That would be more than 40 times the $1.65 billion that Google paid for YouTube in 2006. BofA predicted YouTube’s revenue will hit $13 billion in 2017.”

“Alphabet doesn’t disclose how much money YouTube is making, but RBC Capital analyst Mark Mahaney estimates YouTube’s annual revenue has reached $10 billion and is increasing by as much as 40% a year. The growth makes YouTube “one of the strongest assets fundamentally on the Internet today,” Mahaney wrote in a research note this week.”

As far as I am presently aware, the true fact stands that YouTube is valued by multiple sources at around $100 billion, and they absolutely are taking a massive cut from content creators. Regardless of their exact numbers, the fact remains that they are taking a massive cut that could otherwise go directly to content creators, that absolutely, unequivocally makes the difference for many of those creators between profitability and operating at a loss.

In any case, if you have incontrovertible evidence that YouTube is actually unprofitable today, and why that is (i.e. is it because they’re just investing all that profit back into growth, or are their upkeep costs truly just on the order of multiple billions of dollars?), would love to see it and adjust this accordingly. Doesn’t really change any of the points made though.

In re: your second point, getting users to pay for content is absolutely part of the equation, but not the entire equation. The whole other half of it is creating ways to minimize the cut a middleman takes such that even if it’s zero sum game, more of the sum is going to the content creators, as well as developing new revenue streams that don’t require a direct cost from users to give direct profit to content creators.

    Ben Yu

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    Ben Yu

    Thiel Fellow, Harvard dropout. Making content creation profitable x blockchain @ StreamToken.net