YouTube: 1B Viewers, No Profit

http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967

by msoad • 11 years ago

53 77 11 years ago

wsj.com

msoad• 11 years ago

To get around the pay wall, do a google search for title or follow this link:

https://www.google.com/search?q=YouTube%3A+1+Billion+Viewers...

heinrich5991• 11 years ago

This does not seem to work for me.

scrollaway• 11 years ago

It relies on the Referer [sic] header, so if you are blocking it or copying the link and opening in a new tab, that won't work.

Either way, this is a lousy 2-paragraph article that says YouTube isn't making a profit and Google hopes the Music Key program fares better.

jsprogrammer• 11 years ago

Would be nice if posts were tagged [Paywall] so we could avoid them, or just link to the Google search.

davidiach• 11 years ago

I would add that part of the reason YouTube is struggling is because it has become a pretty lousy product for today's standards.

- comments are completely broken

- finding stuff is a process of trial and error

- too many invasive ads

- no pleasant surprises; every time I open Facebook or Twitter I find something new that interests me, which makes me wanna come back, not so with YouTube. In fact I might find better pleasant surprises opening the homepage of Amazon.

baby• 11 years ago

I would also add that finding stuff is hard because there is no way to see the ranking from the search results (and it sometimes yields to videos having more downvotes than upvotes)

onion2k3• 11 years ago

Those reasons would explain why the product is failing but the product isn't failing. It has 1bn viewers and $4bn revenue. By any measure those are signs of a very successful product offering.

Youtube's problems are that their costs are too high. If you have $4bn coming in, but providing the service to generate that $4bn costs $4bn, then you need to do things to make your business more efficient. It really is that simple. Making a "better" product won't change anything if every dollar you bring in still costs a dollar to service. You'd just push the revenue up and still make no profit.

xyzzyz• 11 years ago

For comparison, note that YouTube has ~3x as much revenue as Netflix, and ~20x as many viewers.

http://files.shareholder.com/downloads/NFLX/4026650765x0x804...

gearhart• 11 years ago

Youtube's problems are that their costs are too high.

Is that true? I'm definitely not saying it's not, but it's not self-evidently true.

Is $4 per user per year a lot to pay for being the platform they watch video on?

I agree with your point that their challenge is not about making their product more attractive to new users, but an equally valid conclusion would be that their problem is that their product isn't generating enough value per user, so they can't ask enough value in return - which would be a product design problem, or that their product is generating significantly more value for its users than it's managing to demand in return, which would be a "monetisation" / revenue stream issue.

SeanDav• 11 years ago

Genuine question: What on earth is interesting about Facebook, especially why is Facebook more interesting than YouTube?

I agree that YouTube's ads are invasive and annoying but finding stuff is fairly easy. Agree on comments. Twitter is not at all interesting to me but I can at least understand why some find it interesting, but Facebook - I just don't see that.

TeMPOraL• 11 years ago

Genuine question: What on earth is interesting about Facebook, especially why is Facebook more interesting than YouTube?

Quality content. It's a bit like HN, but with more bells and whistles, broader topic coverage, and with most of the commenters being your personal, real-life acquaintances. Of course Facebook experience strongly depends on the type of friends you have, but I guess a lot of other things in real life depend on that as well.

weego• 11 years ago

Youtube is the most frustrating example of feeling like software innovation for the user is getting stagnant. I'm sure there is constant progress being made behind the scenes, but it feels like it's the same at best, or worse even than it was 3 or 4 years ago as a user:

- I watch a lot of games channels, yet have never watched and constantly tell them I'm not interested in channels that are about Minecraft, yet every time I go my 'What to watch' list there are more Minecraft channels to tell them to ignore.

- I watch a lot of powerlifting/strenght training and rehab videos, and then get recommended with lots of sports channels that are entirely about soccer.

- Recommended channels are almost always non-sensical related to my preferences and browsing history. Currently they have tons of Bollywood/Hindi channels and Jimmy Kimmel in there. No idea why.

- The subscriptions list doesn't order them to put the ones with unviewed new videos near the top of the list. On my laptop there is only room to show 3 channels before the rest get put into a hover-to-show overlay, so I have to take that extra step every time to discover whether there are new vids in 90% of my subs.

On the plus side:

- They also finally removed the need to click twice to not be interested in a channel, even though it was the only option in the click-to-show list.

I'm not suggesting that change for the sake of change is an essential part of UI innovation, the opposite is often true; the right experience can stand the test of time. But the Youtube user experience has been pretty poor for a long time in my opinion, and in places feels actively worse by design.

My only real success story with it is their live stream service for watching live League of Legends is awesome compared to Twitch or Azubu.

I think failing is perhaps an overly strong interpretation of the situation though.

seanmcdirmid3• 11 years ago

i occasionally binge on a specific topic for a few minutes and all my recommends are shot to heck because of it. Also, my country seems to be thrown between Japan, Singapore, India, and china (Hong Kong) pretty randomly, making for even stranger foreign language inclusions in my recommend list.

Joona6• 11 years ago

And the video quality is (still) terrible, or possibly even getting worse.

actsasbuffoon• 11 years ago

You might have a weak link somewhere in your connection to YouTube. ISPs have been known to throttle YouTube to reduce bandwidth costs.

Almost all of the content I find on YouTube is 1080P, and some of it is running at 60FPS.

chiph• 11 years ago

The quality varies - most of my subscriptions now are in 1080, and one of them is 1080p60 (very nice). The 4k content only works for me Tuesday-Thursday-ish (too much network congestion, it seems, despite being on Time Warner's new 100mb service).

What I'd like is the option to filter by video length. Anything under 45 seconds seems to be posted by teenagers, and I just don't care.

josteink• 11 years ago

I would add that part of the reason YouTube is struggling is because it has become a pretty lousy product for today's standards.

Add to that list:

- searching for music is completely (but silently) broken after Youtube music was launched and geo-restrictions imposed on the serarch-results.

Knowing what used to be there, it just seems like someone took a format c: over entire youtube and nobody running the show noticed.

chinathrow• 11 years ago

No profit? A shitload of interlinked meta-data about what and how we consume media.

Of course that isn't laid out in $$$...

venomsnake3• 11 years ago

Remove Content ID and require manually filed DMCA notices. You tube will surge to the top in no time.

misnome• 11 years ago

Beyond the tech circles, I bet nobody really cares about this at all.

venomsnake3• 11 years ago

Make mass takedowns harder and you will have a lot of increased traffic in youtube. And more popular too. Google also have the legal funds to win cases now.

InclinedPlane4• 11 years ago

Oh, they care. It's a huge problem. Spend a ton of effort putting up a let's play video or a review of, say, a video game only to have it taken down or the revenue snatched away. Or, have someone abuse the system against you, which happens, and be forced to struggle through the kafkaesque bureacratic nightmare to get things fixed. Dealing with the broken aspects of content-id and the particular way youtube has implemented DMCA compliance adds a significant amount of hassle and overhead to a great number of folks who make content on the site.

fpgeek3• 11 years ago

I'd make a stronger statement: Outside tech circles I'd bet that, in practice, the vast majority of YouTube viewers would abandon it in droves if YouTube removed Content ID. I'm sure they don't like Content ID in the abstract (and plenty may be frustrated by personal encounters with it), but I bet most of them care far more about the first-party content on YouTube from the entertainment industry that the Content ID "treaty" has made possible.

TazeTSchnitzel2• 11 years ago

It's a massive problem. What's are things that are big on YouTube? Gaming, reviews and mashups. What do Content ID and DMCA takedowns hurt? Gaming, reviews and mashups.

mapt3• 11 years ago

"The results reflect YouTube’s struggles to expand its core audience beyond teens and tweens. Most YouTube users treat the site as a video repository to be accessed from links or embedded video players posted elsewhere, rather than visiting YouTube.com daily. Google executives want them to turn on YouTube the way they turn on television, as a habit, where they can expect to find different “channels” of entertainment."

If they want me to sit in front of this as passive entertainment, why not start by giving me an interface to view my subscribed content, in order, as an RSS-reader-like experience? I should be able to hit 'play' and have it scan through all the new videos on the channels I am subscribed to, without hitting 'click to skip' length ads, going into a mysterious related videos algorithm, or manually navigating through a list and clicking on each one.

For that matter, I should be able to interface with a channel in that way regardless of whether they have created a playlist or not, using 'autoplay in order of upload'.

If you wanna get complicated, give me a search functionality that will do the same. 'Autoplay feed of anything mentioning Minecraft mod XYZ in the title/description'

Right now, Youtube has a nominal subscription function that actively deters you from using it smoothly. Fix that before you assume you can't turn it into a 'habit'.

JonnieCache2• 11 years ago

why not start by giving me an interface to view my subscribed content, in order, as an RSS-reader-like experience?

Can you really not do that? I've never had a youtube account. The plan at the back of my head to build a hideously boring looking "advanced" interface for youtube is creeping forward...

digi_owl• 11 years ago

Yep, you can't. It will give you a list of videos uploaded, but there is no easy way to just hit play and sit through them as if they were a long playlist.

Joona6• 11 years ago

There's this: https://www.youtube.com/feed/subscriptions Which displays the videos the channels your subscribe to have uploaded (newest first).

pjc50• 11 years ago

They don't want you to 'consume' 'content' in submitter order, they want to submit you to the related videos and especially the ads to make sure you are monetized appropriately. If they wanted you to have RSS they wouldn't have killed Google Reader.

mapt3• 11 years ago

Who?

I understand why the uploader would want this, but if it results in me watching less Youtube, I do not understand why Youtube would want this.

neuronic• 11 years ago

Well, one step would be to improve the user experience. Because short of having subscribed or being linked to a video I find it cumbersome to navigate videos.

My entire YT browsing is based on already knowing what I want to watch. I proceed to search and hope that the video is what I am looking for. No previous info about quality, content, anything.

Sometimes I have no clue what I want to watch, I just feel like watching something. Back in the day I would flip through channels until I was caught by something.

YT should have a discover mode that is similar to navigating through channels on the press of a button. Maybe give me some filters and then let me "peak" into videos.

Of course the experience is hard to implement when providers are throttling YT traffic. Flipping through channels would then suck, because the video would take 20 seconds to load all the time.

But yea, that's why I don't use it like TV. I use it more like I use Google Search. When I just want to know random interesting things without knowing what I want to look for, Google Search is not that helpful.

FlyingAvatar• 11 years ago

Even their user experience for being subscribed to channels is pretty bad.

I am subscribed to a dozen or so channels.

The counts on the sidebar for the number of videos that I "haven't watched" is always incorrect. So is the total number of videos that I have subscribed to and not watched.

Clicking on one of your subscribed channels brings to you the channel homepage, but instead of listing new content you haven't seen yet, you see popular content you've seen already.

The only page that seems to be useful and accurate is the subscription list itself, but this isn't prominent or obvious.

I also often get e-mail notifications for newly released videos which I have already watched some hours before the e-mail was sent.

Also, I'd love the ability to pay to remove ads on a channel. The ad revenue for one user watching a given channel has to be trivial, especially for original, instructional content which is what I primarily watch. I bet paying $1 to remove ads on a channel for a year would produce better revenue for YouTube and content producers alike.

vxNsr• 11 years ago

So it's not just me? I tried doing the whole subscription thing-- it doesn't work, because to see the newest videos from each channel you need to go to that channel and reorganize the whole page so it shows newest first each time.

Look, I like looking at related videos as much as the next guy, but first I wanna see all the videos I've already expressed an interest in seeing before I'm shown content that I might not find so entertaining.

InclinedPlane4• 11 years ago

YouTube is an astounding platform with a remarkable social relevancy that many people over ... 25? or so probably don't appreciate. Even more astounding is the degree to which google consistently drops the ball in regard to its development. Much of its success has come in spite of, rather than because of, major changes and "features" google has made to the site. Partly that's because of google's almost pathological inability to develop a real product or to manage a serious customer relationship (where the end-users are also the customers, rather than the merchandise).

At this point I hope merely that google doesn't do anything that inadvertently destroys whatever magic is happening at youtube before a diversified field of real competition exists elsewhere.

hurin• 11 years ago

By comparison, Facebook Inc. generated more than $12 billion in revenue, and nearly $3 billion in profit, from its 1.3 billion users last year.

I didn't realize Facebook had such a small revenue figure - could anyone explain their market cap in that regard? It's highly unusual.

InclinedPlane4• 11 years ago

Their market cap is based on fantasy (but which growing tech company's isn't?) Facebook's valuation is founded on the nebulous idea that somehow facebook's combination of tech talent and userbase will result in massive profits in the future. Meanwhile, facebook managed to game the IPO system deftly and extract a huge wad of cash from investors (and win a massive payoff to its early stage investors), it took almost a full year for the market valuation of facebook to get back to a state where the folks who bought in early to the IPO could finally pass their stock off to other suckers without taking a loss.

onion2k3• 11 years ago

Market cap is an estimate of future value. Investors believe that Facebook will continue to grow and provide services that generate more money than it makes now. Should they stop thinking that the value of the stock will fall, and, obviously, the market cap will contract. A company could have $0 in revenue and a $100bn market cap if people were convinced that in the future that stock will be hugely valuable.

ZeroGravitas• 11 years ago

Isn't a bit magical to grow a $4Billion a year business and end up spending exactly that amount to run it? I know this gets talked about a lot with regards to Amazon, but do the people running Youtube actually get any extra benefit from being profitable?

InclinedPlane4• 11 years ago

Precisely. Amazon and Youtube are both in the same position with regards to profitability. If it were desired they could make it happen, if it's not seen as necessary then they can simply plow all of what would have been their profit margins back into growth and development.

shubb• 11 years ago

So magical it might even be a tax dodge... a lot of companies have a complex structure where some business units are optimized for tax, and other deliver services. They take the profit in the tax optimized units. That might be part of what is going on here...

Coding_Cat• 11 years ago

It should be noted that all of this is based upon "a person with knowledge of the figure". It's easy to manipulate these kind of numbers, and Google might very well have an interest in doing so.

For example, they might attribute the costs of building a new data-center to their YouTube branch, but actually use it for all their services. And they're probably not making their collected data on you into account.

Why might they do this? To make their main business seem stronger at the expanse of YouTube for whatever reason, to help justify lower CPM on YouTube content, because admitting that data-mining your customers is your long-term plan is generally not a smart idea (even if you're Google and people should know by now).

seanmcdirmid3• 11 years ago

I don't think they do this or are allowed to do this. They can of course, not break out earnings by division if they want, but if they do, I don't think Hollywood accounting is permitted or useful.

There are other ways to play this; e.g. microsoft once included MacBU (very profitable Mac office) in E&D (xbox...). But at the end of the day, it doesn't really help anyone.

Morphling• 11 years ago

"to read a full story" and I didn't actually even care...

izietto• 11 years ago

Log-in in order to read the full article is really bad to me

MrBuddyCasino• 11 years ago

I suspect Youtubes main opex is bandwidth. So it all depends on how traffic costs develop over time in relation to advertising revenue. Could this be a motivator for Google Fiber? By cutting out the middlemen, they can lower running costs for their own services.

Joona6• 11 years ago

Definitely. They try to compress the videos as much as they can, load comments only if you scroll down etc.

icebraining• 11 years ago

I doubt lazy loaded comments have anything to do with bandwidth concerns - a page full takes less than a single frame of video. Most likely, it's to avoid internal IO, especially now that they're pulling comments from Google+ as well.

unicornporn3• 11 years ago

I believe storage won't be a cheap thing either for this type of business. 300 hours of new video every minute[1] is a lot.

[1] https://www.youtube.com/yt/press/statistics.html

gokhan2• 11 years ago

We don't have a TV unit in our home. People in their 30's or older find it awkward. Kids under 15 absolutely don't care about it, they always have something waiting to watch on YouTube and they consume it using whatever device they have access to.

My 2.5yo can open YouTube app on whatever device she finds on the coffee table and usually find content through suggestions. 8yo already got banned from YouTube by watching excessive amounts of Minecraft videos, until summer.

We hosted a reunion event for kids of close and distant relatives during the semester and 1/4 of the day spent on YouTube, a stat based on 5 kids ranging from 2.5 to 11.

I don't see any other platform reaching every kid in the world other than YouTube. Are there any? Google will sure monetize it better than today, all TV entertainment in the future will be consumed through companies like YouTube, Twitch etc. It's easier to see it if you live with younger people.

duiker101• 11 years ago

8yo already got banned from YouTube by watching excessive amounts of Minecraft videos, until summer

How? I keep youtube in the background for music almost all day and didn't know you could get banned for "watching too much"

JonnieCache2• 11 years ago

I think he means he banned his child.

rrrhys• 11 years ago

By the parents!

seanmcdirmid3• 11 years ago

I don't think that is what parent meant, YouTube is not doing the banning.

skc• 11 years ago

I'm interested in knowing what trick you use to keep youtube on in the background for music.

I listen to Jazz and this sounds like something I need to know how to do

gokhan2• 11 years ago

We restricted the site on iPad and removed YouTube app. App store is already password protected so he can't install it back. His PC is on MS Family Safety, so similar measures there. Sorry for my unclear narrative.

Thimothy• 11 years ago

Ah... The old "get a live" banning. I've been banned from youtube myself due to excessive watching of Leonard Nimoys "Ballad of Bilbo Baggins" tribute videos. For some reason the algorithm though that "2" was enough to trigger this kind of banning.

puranjay• 11 years ago

I recently bought a TV after spending all 7 years of my post-high school life without a TV.

I gotta say, I missed switching on the TV, leaning back and just droning off, remote in hand.

On-demand video is great, but it requires too much involvement. This isn't a bad thing, necessarily, but sometimes, you want to turn on a screen and just push channels.

Another problem with YouTube: too many ads. I can't count the number of times I've skipped a clip because of a pre-roll ad. I'm okay watching a 30 second ad if the clip itself is 30 minutes long. But a 30 second ad to watch a 45 second clip?

Please. I've got better use of my time.

corobo2• 11 years ago

But a 30 second ad to watch a 45 second clip?

That doesn't happen. At least be realistic in your arguments please. Maybe sometimes you might get a skippable advert that long but you can skip those after 5 seconds

"Ads can be a maximum of 15 seconds (next to short-form videos <10 minutes long), or 30 seconds (next to long-form videos >10 minutes long)."

http://static.googleusercontent.com/media/www.youtube.com/en...

Aoyagi• 11 years ago

Maybe if the site wasn't a bloated mess of useless or barely working features, people would be willing to turn off their adblocks.

Plus I bet they do get their money through some tax loops or some other form light money launder.

If not the money, they do get gigantic userbase they can harvest for data, unlike G+.

iagooar• 11 years ago

Actually making no profit, but at the same time not losing money is "good enough" for a company like Google. The massive amount of users allows for analyzing behavior patterns and increasing the profile information that later on is used to improve targeted ads like adwords.

Not only this, but being able to have a larger pool of employees without losing money has its own benefits, like easily reallocating the best performing or fitting people on other, more profitable projects or urgent problems.

fpgeek3• 11 years ago

It's not that simple. Breaking even may be "good enough" strategically for Google, but, tactically, it is a problem for YouTube and everyone that works on it. The harder it is to concretely demonstrate YouTube's value to Google, the harder it is to make the case for investing in YouTube, rewarding employees competitively, against unwise cost-cutting and so on. Things don't fall apart overnight, but over time...

Joona6• 11 years ago

Why does Youtube not have pay-to-watch channels, or just the ability to "donate" to channels? This is a huge deal on Twitch (channels have thousands of paying "subscribers").

TazeTSchnitzel2• 11 years ago

It does have them actually, but (somewhat understandably) nobody uses them.

Off-site schemes like Patreon are far more popular. That allows people to donate a small amount monthly, or a small amount per piece of new content. They get incentives (à la Kickstarter) to donate extra.

Patreon has addition appeal possibly because it doesn't make you entirely reliant on Google for your income. Even those making millions of YouTube get shitty support and could have their channel kicked off YouTube (or pulled out of the Partner Program) at a moment's notice for no good reason, with nobody to complain to if that happens.

Joona6• 11 years ago

Patreon-style payments are what I meant by donations, but I guess people just won't trust Google enough for that.

fpgeek3• 11 years ago

This really puts the whole Music Key controversy in perspective.

If YouTube isn't making money, then of course they're going try to alter their deals, no matter how many indie musicians it pisses off.

arfliw• 11 years ago

It's not that there is a lot of junk on YouTube. There is a lot of junk on my 900 channels of TV, too. But I have a handful of go-to channels, DVR and a huge schedule showing me what's happening across all of those channels. Problem solved. YouTube has none of those. That's why I use YouTube exactly like they said, I'm linked to it elsewhere. Or I go and search for something specific.

Discovery is the problem. Not a lack of quality content.

unicornporn3• 11 years ago

So, how can I read this article? I get "To Read the Full Story, Subscribe or Log In" even when viewing the page in a clean session.

YouTube: 1B Viewers, No Profit

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