It’s widely believed that YouTube has yet to make a profit. But 2010 could see it making money for the first time in its history thanks to clever advertising and improved relationships with copyright owners.
YouTube
YouTube is now five years old, and has enjoyed quite a history in that short space of time.
It was approaching profitability before Google swooped into acquire the site for $1.65 billion, and the search giant has focused its attention on setting the site on a new path with longterm goals in mind rather than chasing short term profits.
Those longterm goals may be about to pay off as an improved advertising setup combines with an increasing userbase to put the site in the black for the first time.
YouTube Advertising
YouTube has had some form of advertising on its site since Google took over. But the majority of video clips have been excluded for fear of making money from copyrighted material, an offense Viacom accused Google of committing in its recent lawsuit.
At one point around 96 percent of all YouTube videos were ad-free for this very reason, but according to The New York Times that figure has dwindled to 86 percent. That leaves 14 percent of YouTube videos with some form of advertising.
The main focus of the NYT feature is how YouTube is now able to advertise against copyrighted clips uploaded without permission from the owners. Where once they would have been removed, they are now left on the site complete with ads so that both Google and the copyright owner can make some money.
This is something we covered way back in January 2009 when a Japanese anime company called Kadokawa used this method to its advantage.
Profitability Beckons?
With YouTube now serving around 2 billion video ads a week revenue is expected to hit around $450 million in 2010. That should earn Google its first profit on the property it paid well over the odds for almost four years ago.
Once YouTube is making a profit I doubt it will ever make a loss again, as its viewing figures are continuing to climb month on month. And as these new figures show, the opportunity to display advertising is also growing.
