YouTube could be heading for $1 billion in annual revenue as Google’s advertising efforts start paying off. Unfortunately, Google is facing a $1 billion lawsuit from Viacom over unauthorized clips on YouTube. The universe works in mysterious ways.
Google’s YouTube
Google acquired YouTube for a whopping $1.65 billion in October 2006, just 18 months after the domain name was registered. Google CEO Eric Schmidt has since stated he thinks the company paid way over the odds for the startup, but that it was a necessary purchase.
What Google got was a YouTube that’s very different than the one we see today. Piracy was still rife, with unauthorized clips all over the site. Although these were eventually removed it took a lot longer than it does these days.
YouTube Revenue
YouTube has likely never made money for Google, at least if analysts’ previous attempts to estimate the incomings and outgoings of the company are to be believed.
However, according to MediaMemo, Citigroup’s Mark Mahaney has a different view. He estimates that YouTube made around $727 million in revenue in 2009, will make $945 million in 2010, and $1.1 billion in 2011.
He doesn’t mention the expenses YouTube carries with it, which are likely to be vast. However, with those sorts of revenues there’s a strong chance that YouTube is either already turning, or about to turn, a profit for Google.
Mahaney’s methodology was simple: transpose MySpace’s revenue-to-page view ratio with YouTube’s. Which is hardly scientific but is as good a method as any with Google continuing to keep official figures confidential.
Google Vs. Viacom
Today has also brought new news in the continuing legal battle between Google and Viacom. The latter sued the former for $1 billion in damages way back in 2007, alleging “massive intentional copyright infringement.”
Viacom‘s complaint is that Google profited from the 160,000 unauthorized clips on the site before new methods were introduced to combat uploading of pirated video clips.
According to CNET, both sides are filing motions for summary judgment. In essence, this means that the talking is over with both sides now confident enough to put their case forward. It’s now up to the judge to decide the next course of action but the case is likely to come to a head very soon.
