Business News Digital

YouTube seemingly not making a profit

By | Published on Friday 27 February 2015

YouTube

Someone with knowledge about such things recently posited an opinion to me that the only standalone digital music service to ever make a real profit was Beatport, so thank God they’ve just launched a streaming service to screw everything up, we wouldn’t want there to be any profitable digital music services out there would we?

And before you say, but what about YouTube, well, people it appears that the popular video site, with its one billion active monthly users and $4 billion in annual revenue, isn’t generating any profit for parent company Google. This is according to various sources who have spoken to the Wall Street Journal.

As to why such a successful service isn’t profitable, it’s likely that Google, like most content streamers, is facing the challenge of having to entertain a sizable audience that doesn’t generate it much revenue.

Though whereas a service like Spotify is having to service much less lucrative freemium users while earning from premium subscribers, with YouTube – which is only just playing with premium at all – the problem is users where lots of advertising can be served versus those where ad spots are in short supply.

Some reckon that part of the problem is the amount of YouTube videos streamed as embeds on other websites and social networks, where there is less ad collateral available.

The solution to that, therefore, is to try to drive more people to the YouTube site itself, and if possible its home pages, which is something it has been trying to do for a while now with various marketing and content partnership initiatives, and, indeed, with Music Key, which will try to keep music fans within the YouTube ecosystem longer.

Though it’s arguably the costs of those initiatives which is preventing short-term profitability at the Google unit.



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