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0 pointsRetric6y ago0 comments

Facebook was a good example. They avoided excessive advertising in their growth phase, effectively spending potential profit for a huge user base. Critically, the profit was intangible as was the investment as the IRS does not care about money you never collected or the number of users you have only cash.

YouTube is another, as far as we can tell it’s currently extremely profitable yet people looking at their financials where laughing at the sale price when Google Snatched it up. Part of this is from ever more advertising coupled with ever lower bandwidth costs.

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bsder6y ago

> YouTube is another, as far as we can tell it’s currently extremely profitable

Anecdotally, the fact that YouTube is flooding their channels with more and more advertisements would seem to indicate that they are NOT profitable at all.

I now loathe YouTube links and highly encourage people to try to put their video content anywhere else (even their own webpage--hosting is a lot cheaper now).

chii6y ago

google derives much more value from youtube's viewership data than the profit in ads it makes imho.

Youtube's profit model is only profitable at google scale - imagine the capital expenditure to build out such a large video platform (not very many other tech giants have been able to build video, and have it be free).

sharkjacobs6y ago

I always understood that the viewership data was valuable because it enabled Google to earn more money selling ads.

What is the value of viewership data apart from advertising?

PeterisP6y ago

I read the parent post as asserting that the value of ads placed on youtube is not as large as the incremental value to non-youtube ads (which is a much, much bigger market) from better targeting enabled by youtube data.

I don't know if that's true - youtube ad revenue seems to be ~10% of total google ad revenue; so for that to be true youtube data would have to provide 10% revenue boost to existing ads over all the other (many!) data sources that google has, and I'm not certain if it's realistic.

chii6y ago

if it wasn't google who bought youtube, the viewership data would only have been useful for the ads on youtube. But because it's google, they can leverage this data on the entire google platform, and thus derive more value from it. This means they can afford to make less money on youtube and still have it be valuable. That is why google bought it and not microsoft (or another non-advertising company).

RetricOP6y ago

Estimates for YouTube are on the order if $15-25 billion in annual revenue and a ~50% profit margin. With very solid revenue growth. The data is clearly worth real money, but I doubt the data alone is worth 5+ Billion on it’s own.

PS: People are watching on the order of 1 Billion hours per day of video so IMO those revenue numbers may be low as that’s 1$ of revenue per ~15 hours of video watched.

chii6y ago

youtube's revenue remains undisclosed in google's financial statements (see https://www.nytimes.com/2019/07/24/technology/youtube-financ...). The $15-25 billion is merely a guess.

The fact that google chose not to reveal youtube's financials is stark evidence that it's financials aren't great (otherwise, disclosing it should lead to better stock prices for google!).

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bsder6y ago

> YouTube is another, as far as we can tell it’s currently extremely profitable

Anecdotally, the fact that YouTube is flooding their channels with more and more advertisements would seem to indicate that they are NOT profitable at all.

I now loathe YouTube links and highly encourage people to try to put their video content anywhere else (even their own webpage--hosting is a lot cheaper now).

chii6y ago

google derives much more value from youtube's viewership data than the profit in ads it makes imho.

sharkjacobs6y ago

I always understood that the viewership data was valuable because it enabled Google to earn more money selling ads.

What is the value of viewership data apart from advertising?

PeterisP6y ago

chii6y ago

RetricOP6y ago

PS: People are watching on the order of 1 Billion hours per day of video so IMO those revenue numbers may be low as that’s 1$ of revenue per ~15 hours of video watched.

chii6y ago

youtube's revenue remains undisclosed in google's financial statements (see https://www.nytimes.com/2019/07/24/technology/youtube-financ...). The $15-25 billion is merely a guess.

The fact that google chose not to reveal youtube's financials is stark evidence that it's financials aren't great (otherwise, disclosing it should lead to better stock prices for google!).

1 more reply

j / k navigate · click thread line to collapse