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How much is YouTube worth today?

elephant_burger 6y ago
Google acquired YouTube for US$1.6bn in 2006. How much is it worth today?
IceWreck 6y ago
If google was selling youtube today, would anyone even buy it? How many companies can afford to keep it running? How many would want to ?
- ralfd 6y ago
  You don't have to sell to another company, you can directly sell to the stock market in a spin off. https://www.cnbc.com/2019/10/29/analyst-alphabet-should-spin-off-youtube-would-be-worth-300-billion.html https://www.cnbc.com/2019/10/29/analyst-alphabet-should-spin...
  - ckdarby 6y ago
    This would be quite interesting. I don't think both could continue to grow and thrive without each other though. Android, Youtube, Google Search, Gmail and Google Maps feel like the only things that keep Alphabet relevant. Google search ads appear to be a losing battle with uBlock, pi hole, etc. I also think a significant portion of their users have trained themselves to skip the results marked as Ads altogether when looking for results. The saving grace in this space has been the mobile landscape where they can be gatekeepers to prevent ad blocking. Alphabet/Google has already been walled out of most social spaces, Tiktok, Snapchat, Instagram (not entirely), WeChat, and WhatsApp. Youtube is fairly unique with the ability to embed the ads within the video stream itself. It is technically possible on the technological side, but at what time and effort cost? It would be a lot of effort to break apart all of the infrastructure that YouTube has that is general Alphabet infrastructure. My understanding would be their costs would both go up as well because their volume would decrease as standalone entities. It would be a bold & interesting change but I don't foresee it in the near future unless DoJ breaks them up.
    - richardwhiuk 6y ago
      Chrome? Google Ads?
    - partingshots 6y ago
      Waymo? Verily?
- golergka 6y ago
  > How many companies can afford to keep it running? Doesn't it pay for itself many times over with ad revenue?
- disown 6y ago
  > If google was selling youtube today, would anyone even buy it? Of course. It's the premier video platform not just of the US but the world. And it's only going to grow. > How many companies can afford to keep it running? How many would want to? Every major company in the US. And every major international company around the world and maybe even governments around the world would want to buy youtube. But I highly doubt we'd let a foreign company get control over youtube. Youtube is important enough to be a national security matter. Google is known for shutting down products left and right. It's kept youtube around for 15 years. That, in and of itself, should tell you something. Youtube is one of the world's most valuable/important products right now. You think no one would be interested in buying it?
- deleted 6y ago
  [deleted]
- ThePadawan 6y ago
  I'm sure there are a lot of companies with more money than sense that would buy any brand that would make them appeal to the Youtube audience. Like when Yahoo bought tumblr. A baffling move, and now tumblr's dead. But at least somebody bought it (and not for cheap).
- vl 6y ago
  YT is uniquely integrated with Google infrastructure. It can be spun off on paper, but if it’s spun off technologically, its expenses will rise a lot, since right now it gets cost reduction by sharing infra with other Google properties.
- tester756 6y ago
  Amazon, Microsoft or Chinese power houses like Alibaba, Tencent; I guess? All of them seems to be capable of working at _giant_ scale.
mandeepj 6y ago
$15.15B revenue in 2019. But, its worth is way more than that
- VirenM 6y ago
  With ~745MM outstanding GOOG shares, I'll gladly take the 20x P/E ratio over the other _overvalued_ FAANG letters. I understand if YouTube spins off they might have comparatively lesser shares, but it's an interesting thought experiment. Only time will tell.
corobo 6y ago
$168 billion to save a click. Do click through if you're going to argue it though, HN. There's a lot of working out in there
- raiyu 6y ago
  It would be worth more than that. It’s per user revenue is low and can be increased to $20 as author notes. Today’s market values growth over everything and since they are profitable they will get a steep multiple. Markets are irrational and trade on momentum. The valuation provided is more of the floor than what it would trade based on growth expectations and general excitement. Unlike FB which has competition from Twitter and Snapchat and would be suffering had it not acquired Instagram, YouTube itself has no direct competition in its space. More likely it would trade at $250-350b Either way it along with Instagram are the two best acquisitions in modern tech history.
  - switch11 6y ago
    that is interesting claiming YouTube and Instagram are the two best acquisitions in modern tech history is one heck of a claim Android instantly beats them both COMBINED That being said they would definitely be in theTop 10
    - opportune 6y ago
      I think it's hard to value Android given that its monetization scheme (lower CAC for Google Search) really only works for Google. If any company other than Google owned Android, it might not have been funded so well for so long, all while giving it away for free.
    - fomine3 6y ago
      YouTube and Instagram were already huge brands when they bought but Android isn't. Possibly they can buy other OS (like Palm?) or develop it yourself?
  - gerash 6y ago
    Instagram IG TV and TikTok are video repositories, aren't they? They're not searchable though.
PunchTornado 6y ago
Article says 160bn. I disagree. If google would sell youtube now, no company will have 160bn at their disposal to buy it + all the money needed to integrate it and keep it running. Imagine the HUGE COST associated to disconnect it from other google products. If youtube would be sold at an auction tomorrow, few companies will come (facebook, amazon etc.) and it will receive way under 100bn.
- SahAssar 6y ago
  The more likely scenario would be spinning it out as a separate company in which case it would probably be the biggest google cloud customer for a long while.
- intricatedetail 6y ago
  It's kind of money a hostile state would have backed a tech company with to access all personal data.
  - VLM 6y ago
    Like Reddit and China but on a much larger scale.
    - disown 6y ago
      This nonsense again. If china has control over reddit, how come there are so many anti-china propagandists like you on there? The china subreddit itself is entirely an anti-china propaganda cesspool. Hasn't been anything china related on that sub for years now. Now if you said saudi arabia or israel, maybe there is an argument to be had there. But the china or russia controlling everything narrative doesn't hold up to reality.
      - garbagetime 6y ago
        If China had control over Reddit, mass-deleting criticism of China would be the stupidest move possible. Everyone would notice, there would be a lot of anger, Reddit would lose a lot of its userbase, and animosity toward China would grow. Much better to just gently push toward the preferred path whenever a decision comes up. Which is possibly what they actually do with their smallish influence on Reddit. That way things would likely be better for China than they would have been without the interference, rather than likely being worse.
vsskanth 6y ago
They assume YouTube's content costs will scale similarly to Netflix, which doesn't appear correct to me, mainly because YouTube content is largely user generated and I would assume orders of magnitude more new content is uploaded per day than Netflix. I don't know if you could even use Netflix CDN tricks since their content keeps changing constantly. Considering pretty much every YouTube video I see these days is uploaded in 1080p or 4k, these costs would start to matter eventually. I wonder how this affects their operating margin, considering this article calculates it to be between 5-18%.
- raiyu 6y ago
  The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Just look at the debt load of Netflix. The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Also you can never compete with the viewer numbers between a product that is paid versus free so the most that YouTube has established is clearly much greater and visible in that it has no direct competition in the user generated video space for 15 years until perhaps maybe tiktok but tremendously different platforms. Meanwhile Netflix has competition from Amazon Prime, Disney, Hulu, HBO, and others.
  - vsskanth 6y ago
    >The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Youtube has to share it's revenue with content creators, unlike Netflix. >The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Does this hold true for constantly changing HD video content, unlike traditional media ?
    - reaperducer 6y ago
      Youtube has to share it's revenue with content creators, unlike Netflix. I don't know if this is true. I can't say that I know the inner workings of any of the Netflix contracts, but in entertainment it is common to not only pay to acquire the rights to display the content, but then to pay again for each time it is viewed. Sometimes it's paid monthly or yearly. In other cases (broadcast television, for example), it's part of the negotiating process for content renewal. ("Oh, the ratings for our show on your station are up 40%, so we want more money to renew.")
durnygbur 6y ago
$168 billion for video streaming website showing mostly ads interrrupted with even more ads? The internet is broken.
- askafriend 6y ago
  I watch more YouTube than I watch TV or Movies period. I pay for YouTube Premium - $10 a month for no ads. Works perfectly for me.
  - mrits 6y ago
    Same, at this point if I had to make choices I'd only pay for Netflix/Youtube
  - OJFord 6y ago
    Is it completely free of adverts, on everything? Whenever it advertises premium to me it focuses on music, which is particularly stupid given it must know I never watch music videos, so I just assumed (and actually thought I had read/heard) it was just for music.
    - throwaway3699 6y ago
      Yup, well worth it for me. No guilty feelings about hurting creators with Adblock.
    - wayanon 6y ago
      Yes it makes YouTube free of all ads. Another nice feature is background audio continues to play when youre out of the app. Best £12 month I spend. It’s £15 if you pay via the app so it’s better to subscribe when logged in to YouTube.com
      - dghughes 6y ago
        > Another nice feature is background audio continues to play when youre out of the app It used to do that free.
someonehere 6y ago
I remember a story from someone at the time (or maybe I had read somewhere), that their bandwidth bills were so high in the early days, they were asking employees to open up credit cards and use those personal cards to help keep things running.
- redis_mlc 6y ago
  From reporting at the time: - the founders had previous exits, and had very high-limit credit cards (think 6 figures) - their VC (who had access to monitoring graphs) wrote them a check every time they ran out of storage to keep the growth "up and to the right" - Google dragged out the close for a long time (several months), so there was a feeling of limbo - Google ended up spending around $1 billion in litigation costs with studios over content claims - during the legal actions, studios kept uploading their own content to maintain views, while griping about theft of the same files. - all pre-sale YT staff received at least $1 million, though most had worked there less than a year. Very cool. - to understand the context of the above, rack-mount servers were in the $10,000 range and bandwidth was $1,500/Mbps 95% at the time, which stopped most competitors cold. - there's a famous San Jose Mercury News article with a double-page chart comparing Google Video to YT - YT had twice as many features.
koala_man 6y ago
I was working at Google when they bought YouTube for nearly $2B, the by far largest purchase at the time. That is week's TGIF had incredulous engineers questioning the decision, and Larry explaining that it was indeed steep, but that he saw incredible potential. He was right yet again.
- rileymat2 6y ago
  Were the objections about the size of the opportunity or whether they could have out competed it with Google Video at a fraction of the cost?
  - coding123 6y ago
    They had a very strong engineering mindset - how many times have you seen in HN about how someone can write an Uber in a few weekends and literally replace Uber. We tend to think it's about the codebase, but it's not. The market position isn't gained by writing a loop and displaying content you're storing. It's literally 0.00001% of the total cost of acquiring customers.
- chaos_a 6y ago
  Same with android, bought for $50M and is now one of the most used operating system globally. https://venturebeat.com/2010/10/27/google-exec-android-was-best-deal-ever/ https://venturebeat.com/2010/10/27/google-exec-android-was-b...
  - coryrc 6y ago
    Hasn't it made Microsoft more money than Google?
    - skj 6y ago
      I don't know, but if so, is that relevant? The question was whether or not it was a good deal for Google. It's not zero-sum.
dghughes 6y ago
YouTube is now an ad engine interspersed with some videos between the ads.
- darkhorse13 6y ago
  That's a very reductive (and unoriginal) take.
  - qzw 6y ago
    Sure, but doesn’t make it a (completely) false statement.
  - selfhoster11 6y ago
    You should try Youtube on Android some day. You'll agree after a few videos.
- cco 6y ago
  I'm not sure if this is a failure of YouTube advertising it, joke intended, but YouTube Premium is the best value monthly subscription that I have. I just recently upgraded to the family plan at $17.99/month so I could add two of my friends. That's ~$6 per month to enjoy YouTube completely ad free, allows you to download YouTube videos to your phone for offline viewing, allows background play, _and_ gets you YouTube Music Premium(I still am using Google Play Music, but this is basically a "free" Spotify subscription) as well. Its such a good value for me and I think it'd be a great value to a lot of other people as well but every time I mention it I feel like people have never heard of it.
  - unclekev 6y ago
    > I still am using Google Play Music Didn't they shut down Google Play Music recently?
    - partingshots 6y ago
      It’s just YouTube Music now.
samfisher83 6y ago
If Youtube was profitable I think Google would have broke out its earning. If it isn't profitable now how is it going to profitable in the future and if it is how profitable will it be? Will it have have 90% margins? Same with netflix. These aren't software companies they are television companies, but with software company like valuations.
- londons_explore 6y ago
  YouTube's costs are rather entangled with the rest of googles costs. You could hire many different accountants and either find it to be very profitable or deeply loss making depending how much you value YouTube's use of Googles CDN's, network, and infrastructure. It's far more expensive to deliver YouTube video content than it is to deliver say Netflix where the library is tiny and very cacheable in comparison. Having said that, YouTube could quickly pivot to profitability if they simply said "any video that gets less than 1000 views a day will be deleted". And if they could suppress the inevitable user revolt...
  - samfisher83 6y ago
    Most their costs are not cdn or video delivery. Its paying content creators.
    - chii 6y ago
      > Most their costs are not cdn or video delivery. Its paying content creators. if you're talking about youtube here (it's not clear from your context), youtube is paying content creators with 55% of revenue from an ad (since YT takes a 45% cut). But YT only pays out when there's some $100 dollars of accumulated revenue for the content creator - hence there's also some arbitrage interest income that YT gets to earn 100%.
  - meibo 6y ago
    If they would do what you say in your last paragraph, they would be cutting off new creators coming to the platform, which would be incredibly stupid since a lot of small time creators that make great content and wouldn't otherwise still make it big on YouTube. Hiring people to do content instead couldn't replace that and hosting costs for small videos are not the biggest factor, I'm pretty sure.
patwolf 6y ago
When I think about the cultural impact of youtube, 168 billion seems cheap. For my kids youtube is TV. I got Disney+ for my kids, but they'd much rather watch youtube. It also makes a company like Zoom seem overvalued considering they had a similar valuation a few weeks ago.
asimpletune 6y ago
Becoming a paid subscriber for YouTube has been an amazing decision, and I'm so glad to read that 10% of their revenue comes from paid subscribers, while only representing 1% of their user base. It means a paid model could potentially be more competitive than an adtech one! I sincerely wish more current adtech businesses offered premium tiers. How much would you pay/month for a really good search engine?
- deleted 6y ago
  [deleted]
- dasil003 6y ago
  Yes, but why do 1% subscribe? Because everything is on YouTube. Why is everything on YouTube? Because it's free to use. The question then is: how do you keep the flywheel turning without ads?
  - ForHackernews 6y ago
    Ask Netflix
    - mcintyre1994 6y ago
      Their answer is to spend a little over $17 billion on content this year, ie a little over YouTube’s total estimated revenue according to this article.
  - viraptor 6y ago
    > Yes, but why do 1% subscribe? Because everything is on YouTube. There may be also a quite a few subscribing for GPM / TYM. We'll see if that number drops after the migration.
- trident1000 6y ago
  I pay as well. They need to get these damn ads off my Xbox (same account as PC) which they have not implemented. Worth it though.
- 6y ago
pdimitar 6y ago
YouTube can be worth hundreds of trillions today because it has no actual competition. I am actively using `youtube-dl` and trying to find videos in DailyMotion and Vimeo. It's tough and I easily relapse back to YouTube but it helps me to think that any and all denied ad revenue is a protest enough that would eventually be noticed.
wayanon 6y ago
Am I more valuable to YouTube as a Premium subscriber at £12/month or not subscribing and watching ads?
- ThatPlayer 6y ago
  Premium subscriber. According to this article at least, 1% of users are subscribers and make up 10% of their revenue. I believe a lot of content creators have said similar.
- colinmhayes 6y ago
  Article said average ad/user is $8 a year. Even if you're a target user who commands high ad rates you're almost definitely more valuable as a subscriber.
- elephant_burger 6y ago
  Today, you are likely more valuable to YouTube watching ads. In the latest earnings call Alphabet CFO made the comment: "both YouTube Music Premium and YouTube TV do have higher content acquisition costs as a percentage of revenues than YouTube ads and we are early there continuing to build out that subscriber base." YouTube still pays out the majority of subscription revenue to publishers based on viewership but likely must also pay out more to music creators and labels. This is also not counting the costs of its original content. Q32020 Alphabet CFO earnings transcript https://www.fool.com/earnings/call-transcripts/2020/10/30/alphabet-inc-googl-q3-2020-earnings-call-transcrip/ https://www.fool.com/earnings/call-transcripts/2020/10/30/al...
nojokes 6y ago
tl;dr 168 billion
Gunax 6y ago
I am very surprised to find that Facebook is generating more than double YouTube in ad revenue. I would have expected video ads to be much more valuable.
embarcadero 6y ago
Always felt YT sold itself early because they needed someone with deep pockets to defend themselves from the lawsuits over copyright infringement. Insiders, am I wrong?
techsin101 6y ago
However, youtube embodies the biggest flaw of internet infrastructure. Centralized authority, many content creators had their entire channels deleted without any recourse. This is a problem because laws are archaic and Youtube has to comply. If it was decentralized somehow then it won't depend on whims and progress of individual governments. Youtube as a company has taken position that they are not going to be the one fight this fight, and they simply comply and over comply to and DMCA request. So what if youtuber gets deleted, there are plenty to replace them. Perhaps this should also be seen as monopoly, who is a competitor to Youtube? nobody! May be had there been one, Youtube would have been more eager to please content creators and lobby to change laws. Despite exclusively benefiting from most internet user generated content, Youtube has decided to not fight a battle with lobbyists of other industries. They are in position and backing, but they are choosing a path that is focused on short term benefits and keeps ad publishers happy.
elephant_burger 6y ago
Do you think YouTube ad revenues could exceed Google Search? $15bn YT vs $98bn Search (2019)

Google acquired YouTube for US$1.6bn in 2006. How much is it worth today?

If google was selling youtube today, would anyone even buy it? How many companies can afford to keep it running? How many would want to ?

ralfd 6y ago
You don't have to sell to another company, you can directly sell to the stock market in a spin off. https://www.cnbc.com/2019/10/29/analyst-alphabet-should-spin-off-youtube-would-be-worth-300-billion.html https://www.cnbc.com/2019/10/29/analyst-alphabet-should-spin...
- ckdarby 6y ago
  This would be quite interesting. I don't think both could continue to grow and thrive without each other though. Android, Youtube, Google Search, Gmail and Google Maps feel like the only things that keep Alphabet relevant. Google search ads appear to be a losing battle with uBlock, pi hole, etc. I also think a significant portion of their users have trained themselves to skip the results marked as Ads altogether when looking for results. The saving grace in this space has been the mobile landscape where they can be gatekeepers to prevent ad blocking. Alphabet/Google has already been walled out of most social spaces, Tiktok, Snapchat, Instagram (not entirely), WeChat, and WhatsApp. Youtube is fairly unique with the ability to embed the ads within the video stream itself. It is technically possible on the technological side, but at what time and effort cost? It would be a lot of effort to break apart all of the infrastructure that YouTube has that is general Alphabet infrastructure. My understanding would be their costs would both go up as well because their volume would decrease as standalone entities. It would be a bold & interesting change but I don't foresee it in the near future unless DoJ breaks them up.
  - richardwhiuk 6y ago
    Chrome? Google Ads?
  - partingshots 6y ago
    Waymo? Verily?
golergka 6y ago
> How many companies can afford to keep it running? Doesn't it pay for itself many times over with ad revenue?
disown 6y ago
> If google was selling youtube today, would anyone even buy it? Of course. It's the premier video platform not just of the US but the world. And it's only going to grow. > How many companies can afford to keep it running? How many would want to? Every major company in the US. And every major international company around the world and maybe even governments around the world would want to buy youtube. But I highly doubt we'd let a foreign company get control over youtube. Youtube is important enough to be a national security matter. Google is known for shutting down products left and right. It's kept youtube around for 15 years. That, in and of itself, should tell you something. Youtube is one of the world's most valuable/important products right now. You think no one would be interested in buying it?
deleted 6y ago
[deleted]
ThePadawan 6y ago
I'm sure there are a lot of companies with more money than sense that would buy any brand that would make them appeal to the Youtube audience. Like when Yahoo bought tumblr. A baffling move, and now tumblr's dead. But at least somebody bought it (and not for cheap).
vl 6y ago
YT is uniquely integrated with Google infrastructure. It can be spun off on paper, but if it’s spun off technologically, its expenses will rise a lot, since right now it gets cost reduction by sharing infra with other Google properties.
tester756 6y ago
Amazon, Microsoft or Chinese power houses like Alibaba, Tencent; I guess? All of them seems to be capable of working at _giant_ scale.

mandeepj 6y ago

$15.15B revenue in 2019. But, its worth is way more than that

VirenM 6y ago
With ~745MM outstanding GOOG shares, I'll gladly take the 20x P/E ratio over the other _overvalued_ FAANG letters. I understand if YouTube spins off they might have comparatively lesser shares, but it's an interesting thought experiment. Only time will tell.

corobo 6y ago

$168 billion to save a click. Do click through if you're going to argue it though, HN. There's a lot of working out in there

raiyu 6y ago
It would be worth more than that. It’s per user revenue is low and can be increased to $20 as author notes. Today’s market values growth over everything and since they are profitable they will get a steep multiple. Markets are irrational and trade on momentum. The valuation provided is more of the floor than what it would trade based on growth expectations and general excitement. Unlike FB which has competition from Twitter and Snapchat and would be suffering had it not acquired Instagram, YouTube itself has no direct competition in its space. More likely it would trade at $250-350b Either way it along with Instagram are the two best acquisitions in modern tech history.
- switch11 6y ago
  that is interesting claiming YouTube and Instagram are the two best acquisitions in modern tech history is one heck of a claim Android instantly beats them both COMBINED That being said they would definitely be in theTop 10
  - opportune 6y ago
    I think it's hard to value Android given that its monetization scheme (lower CAC for Google Search) really only works for Google. If any company other than Google owned Android, it might not have been funded so well for so long, all while giving it away for free.
  - fomine3 6y ago
    YouTube and Instagram were already huge brands when they bought but Android isn't. Possibly they can buy other OS (like Palm?) or develop it yourself?
- gerash 6y ago
  Instagram IG TV and TikTok are video repositories, aren't they? They're not searchable though.

PunchTornado 6y ago

Article says 160bn. I disagree. If google would sell youtube now, no company will have 160bn at their disposal to buy it + all the money needed to integrate it and keep it running. Imagine the HUGE COST associated to disconnect it from other google products. If youtube would be sold at an auction tomorrow, few companies will come (facebook, amazon etc.) and it will receive way under 100bn.

SahAssar 6y ago
The more likely scenario would be spinning it out as a separate company in which case it would probably be the biggest google cloud customer for a long while.
intricatedetail 6y ago
It's kind of money a hostile state would have backed a tech company with to access all personal data.
- VLM 6y ago
  Like Reddit and China but on a much larger scale.
  - disown 6y ago
    This nonsense again. If china has control over reddit, how come there are so many anti-china propagandists like you on there? The china subreddit itself is entirely an anti-china propaganda cesspool. Hasn't been anything china related on that sub for years now. Now if you said saudi arabia or israel, maybe there is an argument to be had there. But the china or russia controlling everything narrative doesn't hold up to reality.
    - garbagetime 6y ago
      If China had control over Reddit, mass-deleting criticism of China would be the stupidest move possible. Everyone would notice, there would be a lot of anger, Reddit would lose a lot of its userbase, and animosity toward China would grow. Much better to just gently push toward the preferred path whenever a decision comes up. Which is possibly what they actually do with their smallish influence on Reddit. That way things would likely be better for China than they would have been without the interference, rather than likely being worse.

vsskanth 6y ago

They assume YouTube's content costs will scale similarly to Netflix, which doesn't appear correct to me, mainly because YouTube content is largely user generated and I would assume orders of magnitude more new content is uploaded per day than Netflix. I don't know if you could even use Netflix CDN tricks since their content keeps changing constantly. Considering pretty much every YouTube video I see these days is uploaded in 1080p or 4k, these costs would start to matter eventually. I wonder how this affects their operating margin, considering this article calculates it to be between 5-18%.

raiyu 6y ago
The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Just look at the debt load of Netflix. The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Also you can never compete with the viewer numbers between a product that is paid versus free so the most that YouTube has established is clearly much greater and visible in that it has no direct competition in the user generated video space for 15 years until perhaps maybe tiktok but tremendously different platforms. Meanwhile Netflix has competition from Amazon Prime, Disney, Hulu, HBO, and others.
- vsskanth 6y ago
  >The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Youtube has to share it's revenue with content creators, unlike Netflix. >The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Does this hold true for constantly changing HD video content, unlike traditional media ?
  - reaperducer 6y ago
    Youtube has to share it's revenue with content creators, unlike Netflix. I don't know if this is true. I can't say that I know the inner workings of any of the Netflix contracts, but in entertainment it is common to not only pay to acquire the rights to display the content, but then to pay again for each time it is viewed. Sometimes it's paid monthly or yearly. In other cases (broadcast television, for example), it's part of the negotiating process for content renewal. ("Oh, the ratings for our show on your station are up 40%, so we want more money to renew.")

durnygbur 6y ago

$168 billion for video streaming website showing mostly ads interrrupted with even more ads? The internet is broken.

askafriend 6y ago
I watch more YouTube than I watch TV or Movies period. I pay for YouTube Premium - $10 a month for no ads. Works perfectly for me.
- mrits 6y ago
  Same, at this point if I had to make choices I'd only pay for Netflix/Youtube
- OJFord 6y ago
  Is it completely free of adverts, on everything? Whenever it advertises premium to me it focuses on music, which is particularly stupid given it must know I never watch music videos, so I just assumed (and actually thought I had read/heard) it was just for music.
  - throwaway3699 6y ago
    Yup, well worth it for me. No guilty feelings about hurting creators with Adblock.
  - wayanon 6y ago
    Yes it makes YouTube free of all ads. Another nice feature is background audio continues to play when youre out of the app. Best £12 month I spend. It’s £15 if you pay via the app so it’s better to subscribe when logged in to YouTube.com
    - dghughes 6y ago
      > Another nice feature is background audio continues to play when youre out of the app It used to do that free.

someonehere 6y ago

I remember a story from someone at the time (or maybe I had read somewhere), that their bandwidth bills were so high in the early days, they were asking employees to open up credit cards and use those personal cards to help keep things running.

redis_mlc 6y ago
From reporting at the time: - the founders had previous exits, and had very high-limit credit cards (think 6 figures) - their VC (who had access to monitoring graphs) wrote them a check every time they ran out of storage to keep the growth "up and to the right" - Google dragged out the close for a long time (several months), so there was a feeling of limbo - Google ended up spending around $1 billion in litigation costs with studios over content claims - during the legal actions, studios kept uploading their own content to maintain views, while griping about theft of the same files. - all pre-sale YT staff received at least $1 million, though most had worked there less than a year. Very cool. - to understand the context of the above, rack-mount servers were in the $10,000 range and bandwidth was $1,500/Mbps 95% at the time, which stopped most competitors cold. - there's a famous San Jose Mercury News article with a double-page chart comparing Google Video to YT - YT had twice as many features.

koala_man 6y ago

I was working at Google when they bought YouTube for nearly $2B, the by far largest purchase at the time. That is week's TGIF had incredulous engineers questioning the decision, and Larry explaining that it was indeed steep, but that he saw incredible potential. He was right yet again.

rileymat2 6y ago
Were the objections about the size of the opportunity or whether they could have out competed it with Google Video at a fraction of the cost?
- coding123 6y ago
  They had a very strong engineering mindset - how many times have you seen in HN about how someone can write an Uber in a few weekends and literally replace Uber. We tend to think it's about the codebase, but it's not. The market position isn't gained by writing a loop and displaying content you're storing. It's literally 0.00001% of the total cost of acquiring customers.
chaos_a 6y ago
Same with android, bought for $50M and is now one of the most used operating system globally. https://venturebeat.com/2010/10/27/google-exec-android-was-best-deal-ever/ https://venturebeat.com/2010/10/27/google-exec-android-was-b...
- coryrc 6y ago
  Hasn't it made Microsoft more money than Google?
  - skj 6y ago
    I don't know, but if so, is that relevant? The question was whether or not it was a good deal for Google. It's not zero-sum.

dghughes 6y ago

YouTube is now an ad engine interspersed with some videos between the ads.

darkhorse13 6y ago
That's a very reductive (and unoriginal) take.
- qzw 6y ago
  Sure, but doesn’t make it a (completely) false statement.
- selfhoster11 6y ago
  You should try Youtube on Android some day. You'll agree after a few videos.
cco 6y ago
I'm not sure if this is a failure of YouTube advertising it, joke intended, but YouTube Premium is the best value monthly subscription that I have. I just recently upgraded to the family plan at $17.99/month so I could add two of my friends. That's ~$6 per month to enjoy YouTube completely ad free, allows you to download YouTube videos to your phone for offline viewing, allows background play, _and_ gets you YouTube Music Premium(I still am using Google Play Music, but this is basically a "free" Spotify subscription) as well. Its such a good value for me and I think it'd be a great value to a lot of other people as well but every time I mention it I feel like people have never heard of it.
- unclekev 6y ago
  > I still am using Google Play Music Didn't they shut down Google Play Music recently?
  - partingshots 6y ago
    It’s just YouTube Music now.

samfisher83 6y ago

If Youtube was profitable I think Google would have broke out its earning. If it isn't profitable now how is it going to profitable in the future and if it is how profitable will it be? Will it have have 90% margins? Same with netflix. These aren't software companies they are television companies, but with software company like valuations.

londons_explore 6y ago
YouTube's costs are rather entangled with the rest of googles costs. You could hire many different accountants and either find it to be very profitable or deeply loss making depending how much you value YouTube's use of Googles CDN's, network, and infrastructure. It's far more expensive to deliver YouTube video content than it is to deliver say Netflix where the library is tiny and very cacheable in comparison. Having said that, YouTube could quickly pivot to profitability if they simply said "any video that gets less than 1000 views a day will be deleted". And if they could suppress the inevitable user revolt...
- samfisher83 6y ago
  Most their costs are not cdn or video delivery. Its paying content creators.
  - chii 6y ago
    > Most their costs are not cdn or video delivery. Its paying content creators. if you're talking about youtube here (it's not clear from your context), youtube is paying content creators with 55% of revenue from an ad (since YT takes a 45% cut). But YT only pays out when there's some $100 dollars of accumulated revenue for the content creator - hence there's also some arbitrage interest income that YT gets to earn 100%.
- meibo 6y ago
  If they would do what you say in your last paragraph, they would be cutting off new creators coming to the platform, which would be incredibly stupid since a lot of small time creators that make great content and wouldn't otherwise still make it big on YouTube. Hiring people to do content instead couldn't replace that and hosting costs for small videos are not the biggest factor, I'm pretty sure.

patwolf 6y ago

When I think about the cultural impact of youtube, 168 billion seems cheap. For my kids youtube is TV. I got Disney+ for my kids, but they'd much rather watch youtube. It also makes a company like Zoom seem overvalued considering they had a similar valuation a few weeks ago.

asimpletune 6y ago

Becoming a paid subscriber for YouTube has been an amazing decision, and I'm so glad to read that 10% of their revenue comes from paid subscribers, while only representing 1% of their user base. It means a paid model could potentially be more competitive than an adtech one! I sincerely wish more current adtech businesses offered premium tiers. How much would you pay/month for a really good search engine?

deleted 6y ago
[deleted]
dasil003 6y ago
Yes, but why do 1% subscribe? Because everything is on YouTube. Why is everything on YouTube? Because it's free to use. The question then is: how do you keep the flywheel turning without ads?
- ForHackernews 6y ago
  Ask Netflix
  - mcintyre1994 6y ago
    Their answer is to spend a little over $17 billion on content this year, ie a little over YouTube’s total estimated revenue according to this article.
- viraptor 6y ago
  > Yes, but why do 1% subscribe? Because everything is on YouTube. There may be also a quite a few subscribing for GPM / TYM. We'll see if that number drops after the migration.
trident1000 6y ago
I pay as well. They need to get these damn ads off my Xbox (same account as PC) which they have not implemented. Worth it though.
6y ago

pdimitar 6y ago

YouTube can be worth hundreds of trillions today because it has no actual competition. I am actively using `youtube-dl` and trying to find videos in DailyMotion and Vimeo. It's tough and I easily relapse back to YouTube but it helps me to think that any and all denied ad revenue is a protest enough that would eventually be noticed.

wayanon 6y ago

Am I more valuable to YouTube as a Premium subscriber at £12/month or not subscribing and watching ads?

ThatPlayer 6y ago
Premium subscriber. According to this article at least, 1% of users are subscribers and make up 10% of their revenue. I believe a lot of content creators have said similar.
colinmhayes 6y ago
Article said average ad/user is $8 a year. Even if you're a target user who commands high ad rates you're almost definitely more valuable as a subscriber.
elephant_burger 6y ago
Today, you are likely more valuable to YouTube watching ads. In the latest earnings call Alphabet CFO made the comment: "both YouTube Music Premium and YouTube TV do have higher content acquisition costs as a percentage of revenues than YouTube ads and we are early there continuing to build out that subscriber base." YouTube still pays out the majority of subscription revenue to publishers based on viewership but likely must also pay out more to music creators and labels. This is also not counting the costs of its original content. Q32020 Alphabet CFO earnings transcript https://www.fool.com/earnings/call-transcripts/2020/10/30/alphabet-inc-googl-q3-2020-earnings-call-transcrip/ https://www.fool.com/earnings/call-transcripts/2020/10/30/al...

nojokes 6y ago

tl;dr 168 billion

Gunax 6y ago

I am very surprised to find that Facebook is generating more than double YouTube in ad revenue. I would have expected video ads to be much more valuable.

embarcadero 6y ago

Always felt YT sold itself early because they needed someone with deep pockets to defend themselves from the lawsuits over copyright infringement. Insiders, am I wrong?

techsin101 6y ago

However, youtube embodies the biggest flaw of internet infrastructure. Centralized authority, many content creators had their entire channels deleted without any recourse. This is a problem because laws are archaic and Youtube has to comply. If it was decentralized somehow then it won't depend on whims and progress of individual governments. Youtube as a company has taken position that they are not going to be the one fight this fight, and they simply comply and over comply to and DMCA request. So what if youtuber gets deleted, there are plenty to replace them. Perhaps this should also be seen as monopoly, who is a competitor to Youtube? nobody! May be had there been one, Youtube would have been more eager to please content creators and lobby to change laws. Despite exclusively benefiting from most internet user generated content, Youtube has decided to not fight a battle with lobbyists of other industries. They are in position and backing, but they are choosing a path that is focused on short term benefits and keeps ad publishers happy.

elephant_burger 6y ago

Do you think YouTube ad revenues could exceed Google Search? $15bn YT vs $98bn Search (2019)