OK, I give up. How does YouTube make money?

Google paid $1.65 billion for what, as far as I can tell, is largely a collection of mediocre home-made video clips complete with comments from the biggest concentration of idiots on the internet.

Why? How does YouTube make money anyway? The Wikipedia page on YouTube isn’t much help:

So they’re not planning to charge people to view videos. Makes sense, as nobody would pay to look at the site, surely?

OK, so there is some income from advertising. But how? The few occasions I have clicked on a YouTube video, I haven’t noticed any ads on the site – OK, on close inspection they are there, but they’re certainly not conspicuous and I don’t know anyone that has ever clicked on one. Sooner or later, surely the advertisers will realise that nobody clicks the ads? Plus, you can embed YouTube videos on other sites, for free, so plenty of viewers aren’t even seeing the surrounding ads in the first place!

Recently I’ve seen billboards (with the amazingly crap slogan “Pee your pants”) advertising “YouTube on your mobile phone” through Vodafone. I assume they are pursuing similar schemes worldwide. So what, do they think people are going to pay to see mediocre home-made video clips complete with comments from the biggest concentration of idiots on the internet on a tiny cellphone screen? :confused:

I really DO NOT GET IT. Why are YouTube’s founders multi-millionaires when nobody is paying to use their site?

You not clicking on ads doesn’t imply that no one clicks on ads.

Straw poll of the office…

  1. Have you ever watched a YouTube video?
  2. Have you ever cklicked on an ad on the YouTube site?

Q 1) 7 Yes, 1 No.
Q 2) 0 Yes, 8 No.

OK, hardly the biggest sample size, but how can a tiny proportion of YouTube users clicking ads, of which a tiny tiny proportion will do anything other than curse because they didn’t mean to click that ad, make the site worth $1,650,000,000.00?

I asked this question last year.

I still don’t know :slight_smile:

Well, the total number of clicks on broadcast television and radio ads all put together is ZERO and they still manage to make plenty of money offering a free service. Remember, smart advertising it not a buy-it-now proposition. It’s building brand image and recognition.

There are also sponsored videos, aren’t there? For example, on the front page of YouTube right now is a trailer for the new movie Superbad. I imagine the studio had to pay for this placement.

Never underestimate teh power of millions of visitors/day.

Even my sorry little site for a local computer repair shop makes about $1 per day on a combination of google ads and paid search engine results from a cobranded google search page. I have a check for $115 coming from Google as we speak. Granted, not gonna pay the bills, but it covers my webhosting and then some. I could easily see people seeing something they are interested in. Some payperclick ads run as much as $2 to the site. 5 million hits/day with even a 1% clickthrough = 5,000 clicks a day or IME about $2,000-$3,000/day. With sponsored videos and such especially with key placement or pay per view advertising of new things like movie trailers they could be raking in the bucks.

On the home page alone there are 4 advertisements, including one from a movie. I imagine all of those companies are paying money to advertise on such a popular site (I’m not a big fan, but a lot of people are). Click on a link and you get more ads.

Also, I’ve noticed that a lot of companies put trailers and such on youTube (one of the only times I ever go there are to watch gaming trailers). For instance I saw an E3 trailer for Warhammer Online the other day. Now, I don’t know if these gaming companies pay anything to youTube, but my guess that at a minimum they would be more disposed to paying some advertising bucks if a trailer for their product is on the system.

I’d say that advertising and marketing alone is how youTube pays the bills…its a lot more lucrative than people think, especially when your website is so popular.

-XT

I’ve seen click logs. The proportion of clicks to views is very low, but nevertheless, ads get clicked thousands of times per minute.

Also, clicks are worth a lot of money. Google may charge a buck or more a click, so it doesn’t take a lot.

OK, but are clicks by morons (most of whom probably never meant to click the ad in the first place, but their lack of opposable thumbs rendered mouse control problematic) actually worth money to the advertisers? If I’m advertising a product, I don’t want to be paying Google/YouTube a buck every time some clown who’s not old enough to own a credit card clicks on my ad.

Surely it’s not sustainable? Maybe I’m just wondering how any internet advertising is sustainable. Seems like eventually people will realise they’re paying for no tangible benefit and will stop.

(As an experiment, I signed up for Google Adsense ads on my site - a blog with very few readers and only of specialist interest. As expected I get very few clicks, but some of them apparently generate over $1 for me, so presumably much more than that for Google. Strange.)

Sponsored videos that hit the front page. Like myspace. CBS, for example, hosts high quality clips of Craig Ferguson’s monologue/sketches. CBS pays youtube, people watch vid, are reminded of night and time, watch the late late show. Plenty of folks are paying to use the site.

And don’t worry about click throughs. Google ads is about click throughs. Youtube and myspace get paid just to have the thing on the front page, which gets god knows how many million hits a day.

If advertisers only advertised to non-morons, every corporation in the world would go bankrupt in six months…

ETA: by which I mean to clarify that 90% of advertising (especially internet advertising) is intended to convince a moron that they desperately need something they didn’t even know existed the minute prior to seeing the ad.

No, I think that 90% of internet advertising is intended to convince a moron that they’ll win free stuff if they punch a frog.

I don’t watch TV commercials either, or read newspapers ads, but those seem pretty sustainable.

:frowning: You mean you DON’T?!?

-XT

YouTube is a goldmine for adverisers. Advertisers put their latest crazy commerical on TV. YouTubers post those commercials on YouTube. People add comments, rate the comercial. And the advertisers know how many people viewed the commerical on YouTube. How much do you think the companies pay YouTube to keep the site sustained, for this?

I don’t understand? If I post the latest amusing commercial on You-tube (those Geico cavemen crack me up, I’m not even sure what Geico sells and those commercials make me want to buy three of them) how does Youtube make money? Presumably the person that produces the commercial doesn’t pay Youtube for my putting their commercial up? How would they know?

They lose money on every video, but they make it up with volume :slight_smile:

Actually it is probably true that most videos don’t make money, but the few superpopular ones have so many viewers that they can charge advertisers serious $.

Also , “professional” videos on YT might be charged $ (e.g movie trailers, previews of shows and such) whether it is better for a movie company to put a trailer on YT vs their own website (or Apple, ar yahoo!) I’m not sure

Brian

:smack:
blackmail :smiley: