How does YouTube profit from your videos? And does Youtube make any money in terms of profit vs. revenue? When you consider increased content royalties, the expense of hosting all those videos, and the fact that YouTube is paid based on how much of an ad is viewed, YouTube may struggle to profit. But I don’t get the feeling that the site is in trouble. According to the most recent revenue numbers from YouTube company Alphabet, YouTube produced $20.21 billion in advertising revenue in just the first nine months of 2021.
This article will examine how YouTube makes money and how this segment of the “Googleverse” plans to profit.
How Does Youtube Make Money?
Youtube generates the majority of its money from adverts, accounting for 11% of Google’s net US ad revenues. Despite the company’s steady shift toward a subscription-based business model, it remains a secondary revenue stream.
#1. Sponspored Videos
Sponsored adverts are one way for YouTube to make money. The circled result in the above image is a paid advertisement. It is a sponsored video, and the advertiser pays YouTube based on the number of views it receives after clicking on such an ad. It is known as SERP advertising.
#2. Embedded Advertisements
An embedded commercial is another source of money for YouTube. This advertisement plays before the video starts. In addition, brief commercials are placed between videos, thus making more money.
In this case, Youtube collects money from advertisers based on the ad’s number of views. A percentage of the amount is paid to the video’s creator.
#3. Landing Pages Advertisement
A landing page is YouTube’s homepage that appears without checking in. This landing page advertisement on YouTube is a banner-type advertisement that can include both images and videos and can be used by advertisers in various ways to tell the story.
#4. YouTube Premium
YouTube, like Netflix, has debuted its subscription-based freemium income model, Youtube Premium, which provides users with an upgraded, uninterrupted experience across YouTube, YouTube Music, and YouTube Gaming.
The following benefits come with a YouTube Premium membership:
- Videos with no advertisements
- Access to YouTube Music Premium
- Exclusive access to YouTube Premium material
- Offline music and videos
- Background play is enabled when using other apps or when your screen is turned off.
The cost of joining is a subscription. Youtube Red costs $11.99 monthly in the United States, but prices vary by country.
#5. Channel Subscription
YouTube’s revenue sources are not limited to adverts.
Starting as sponsorships, the channel memberships feature enables Youtube partners (publishers) to engage more deeply with their audience and make more money from Youtube than simply inserting advertising.
Partners can use this functionality to add a “Join” button to their channel and video pages. Patreon’s business model inspires this membership feature. It allows the author to give special privileges to subscribers who pay $4.99/month, such as goods, offers, discounts on official items, and so on (different for different countries).
Youtube retains 30% of the subscription cost paid by the subscriber.
#6. YouTube TV
YouTube TV is a live TV streaming service available only in the United States that allows members to watch cable networks such as ABC, NBC, FOX, ESPN, Disney, and others on YouTube. This is a subscription-based service that is rapidly growing.
Youtube TV, which has over a billion users, is a tremendous addition to Youtube’s income strategy and a significant competitor to Hulu. The service is $49.99 a month, includes six different accounts, and allows you to stream from over 70 networks.
However, specific premium channels may be subscribed to after paying an additional subscription fee. Youtube TV is available on any device and includes a free Chromecast with every subscription.
#7. Affiliate Earnings
You’ve probably noticed comparable products under some YouTube videos. These products link to affiliate partners who pay YouTube a commission if you purchase their products.
The History of YouTube
Looking back at the YouTube tale may be a valuable exercise in understanding the company’s rapid growth and the future of the YouTube business model.
Jawed Karim, a German-born youngster who migrated to Minnesota with his family in 1992, released a video titled “Me at the Zoo:” on April 23, 2005.
This was the first video shot in the San Diego Zoo for YouTube, the video-sharing platform that will overtake Google as the most popular website in a decade.
YouTube’s Copyright Issues and How It Handled Them
As expansion accelerated, concerns about copyrighted content arose.
YouTube founders met with media executives to persuade them of the commercial value of being included on YouTube.
Google purchased YouTube for $1.7 billion.
The YouTube founders could live and thrive until the big success occurred in 2006. Google paid about $1.7 billion for YouTube.
How YouTube Surpassed two Billion Views In 2010
By 2010, YouTube had over two billion daily visitors.
Just five years prior, YouTube’s founders and former PayPal coworkers sat up all night testing and preparing the video-sharing platform that would be bought by Google just 19 months later!
At the time, YouTube had over 2 billion daily views, far outnumbering all US networks combined.
By 2012, YouTube’s user base would have more than doubled. YouTube’s substantial international expansion continued in 2012.
According to Similar Web projections, YouTube will be the world’s second most popular site between March and May 2022, after only Google. It also offers impressive engagement stats.
YouTube is hugely sticky, with about 30 billion total visits per month, an average visit time of over 21 minutes, and over 12 pages visited per session.
That is also why YouTube is a crucial component of Google’s business model.
As the search engine evolves, it will begin to serve more and more types of content.
As a result, YouTube is now Google’s most valuable product.
Youtube Mission Statement
“We think that everyone deserves to have a voice and that the world is a better place when we listen, share, and build community through our experiences” .
YouTube website
How Much Money Does YouTube Make?
YouTube alone produced nearly $28 billion in advertising income in 2021.
This represented a 45% increase over 2020.
In 2017, YouTube’s ad revenue was less than $10 billion.
However, as Google ramped up and wholly incorporated YouTube into its ad machine, its income exploded.
Furthermore, YouTube produces additional revenue through YouTube Prime, a subscriber service for users who want to experience a version of YouTube without advertisements.
That indicates Google’s YouTube acquisition has been an enormous success so far, with the company potentially worth $300-500 billion (depending on the multiple you might want to apply based on the market context).
Is YouTube’s Economic Strategy Based On Advertising?
“As interactions between users and advertisers change and online user behavior evolves, we continue to extend and evolve our product offerings to accommodate their changing needs,” according to Google’s annual report.
We anticipate that our monetization trends will change over time. For example, we’ve observed an uptick in YouTube engagement advertisements, which monetize at a lesser rate than standard desktop search ads.
Furthermore, we continue to see a shift toward programmatic buying, which allows advertisers to interact with the right user, at the right time and in the proper context. Programmatic buying has a distinct monetization profile on Google properties than traditional advertising buying.
Because of the development in YouTube engagement ads, the number of sponsored clicks through our advertising programs on Google properties grew from 2016 to 2017. The decline in CPC was mainly driven by the sustained expansion of YouTube engagement advertisements, where CPC remains lower than our other advertising platforms.”
The advertising business model for media is not new, and it is the key driver of Google’s profits now and the primary driver of both Google and YouTube in the coming years.
“We also experienced an increase in YouTube revenue, driven primarily by video advertising across TrueView, with a rising contribution from ad buying on DoubleClick Bid Manager, as well as improvements in ad formats and delivery,” according to Google’s annual report.
The advertising business model is not the only one that exists.
YouTube is experimenting with the subscription business model, which has allowed Netflix to expand into a multibillion-dollar company.
Meanwhile, Google (now Alphabet) is evolving YouTube into a fully functional advertising machine, which doesn’t appear to be too unlike how Google monetizes its pages.
Business strategy based on YouTube subscriptions
YouTube Premium, formerly known as YouTube Red, contains features from YouTube and the new YouTube Music app and access to all YouTube Originals series and movies.
What Does YouTube Premium Cover?
Videos with no advertisements: Watch millions of videos without interruptions.
Download videos to watch them later: Save videos and playlists to mobile devices for offline viewing.
Play in the background: Keep films playing while using other programs or turning off your screen.
What Does YouTube Music Cover?
With the new and updated YouTube Music app, you can quickly discover the world of music.
Music without advertisements: Listen to millions of music without interruptions.
Download tracks for offline listening: Save music and playlists to the YouTube Music app for offline listening.
In the background, play: When using other apps or when your screen is turned off, keep the music playing.
What Do YouTube Originals Cover?
It includes original shows and movies ranging from dramas starring award-winning performers to comedies starring top YouTube producers and documentaries about multi-platinum artists. With YouTube Premium, you can access all YouTube Originals available on all devices. The list of movies and programs may be found on the YouTube Originals channel.
What Do YouTube Kids Cover?
YouTube Kids app offers ad-free and offline play.
What Does YouTube Gaming Cover?
YouTube Gaming app supports ad-free, offline, and background play.
YouTube Gaming curates videos from YouTube to provide you with the most significant gaming video viewing experience possible. Everything on YouTube Game is available on the leading YouTube app/site, but only gaming content is available on YouTube Gaming.
What Is Youtube’s Future Potential?
Google has several choices for expanding YouTube. The first is a monthly subscription that allows you to view an ad-free version of YouTube with additional exclusive videos that non-paying users cannot access. In the autumn of 2015, the firm launched YouTube Red, a subscription service aimed at competing with Netflix that allowed users to watch ad-free videos and listen to music without interruptions for $9.99 per month.
On May 17, 2018, YouTube announced the renaming of the service as YouTube Premium and the launch of a new YouTube Music subscription service. YouTube Music is free with advertisements, but it also has a premium tier that allows for ad-free streaming, audio-only background playback, and the ability to save music for offline playback.
As of 2021, YouTube Premium and YouTube Music Premium are $11.99 per month after a one-month trial.
YouTube aims to crack down on in-video sponsorship, which generates no money for the platform. Instead of having their YouTube stars work directly with advertisers, the site hopes to force them into existing ad channels. This dangerous move may drive some video creators away from YouTube, but it does bridge a gap in YouTube’s advertising options.
The main difficulty for YouTube appears to be persuading more users to use the service directly. Too many users appear to be watching embedded videos from other sites or dropping in for the occasional video without going around and surfing more. To counteract this, YouTube attempts to create a destination site that people will visit, providing Google with more opportunities to monetize the video’s page.
Conclusion
YouTube was founded in 2005 by a group of former PayPal workers and developed so quickly that it was acquired by Google for over $1.7 billion 19 months later. In 2021 alone, YouTube Ads produced nearly $28 billion in income for Google. Depending on the multiple users, the corporation might be worth far more than $300 billion.
YouTube also expands its revenue streams by offering additional services, such as premium memberships. So far, YouTube has been one of Google’s (now Alphabet’s) most successful acquisitions.
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