Google To The World: Don't Be So Sure YouTube Isn't Profitable

from the and-there-we-go... dept

Wed, Jul 22nd 2009 4:48am — Mike Masnick

It was just a few weeks ago that we were suggesting all the talk about YouTube's inability to be profitable was suspect, and there was increasing evidence not that YouTube was profitable yet, but that the claims of how much they were losing didn't take into account the real situation. Still, it comes as a bit of a surprise for Google to come out with a blog post that basically tells everyone that they are way, way, way off in thinking that YouTube is a huge money loser for the company. The reason it's a surprise is because it actually seemed like Google enjoyed having people think that YouTube was such a loser, since it held back competition. Perhaps there was some fear that it was also holding down the stock price or something. Either way, hopefully we can put to rest the silly idea that YouTube is some sort of blackhole for money.

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Filed Under: hosting, video, youtube
Companies: google, youtube

21 Comments

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Bettawrekonize, 22 Jul 2009 @ 4:54am

I like Google, they're one of the more honest companies. I suppose that's why so many other rich and powerful entities hate them, they provide a good service at a decent price and others can't stand it because they want to be like cable television and provide a terrible service at an expensive price.
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Anonymous Coward, 22 Jul 2009 @ 5:24am

Re:
Google honest? Who are you kidding?

Youtube is likely never going to be profitable under normal terms. It is probably not as big a drag for Google because they (a) use up server farms that they were paying for anyway, and (b) use the cheapest bandwidth in the universe, the real benefits of mega-bulk buying.

As a stand alone product, YouTube is a huge money loser. Pushed around inside the Google system using Google resources (with internesting account effects of internal sales), there is potential to say that it is a net nothing to the bottom line. But that doesn't mean that anyone else can duplicate those results, because few companies have the same scale to work from.

It's not surprising to see the word monopoly being tossed around.
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R. Miles (profile), 22 Jul 2009 @ 5:35am

Re: Re:
Google honest? Who are you kidding?
Please enlighten us to when Google has never been. As the current CEO has stated many times, they're NOT going to make the same mistakes Microsoft did.

Not surprising the DOJ feels Google's growth in many industries is something to look into. But at every step, Google has been more than forthcoming with its details.

They've yet to break any laws, until such laws are changed to prevent further "Googles" from taking innovation to the next level to protect idiots who could not do the same.

As a stand alone product, YouTube is a huge money loser.
I would like to see your proof on this, please. While YouTube may not be raking in the same millions as other sites (who choose to screw customers over with over-inflated prices), I can't see how YouTube isn't a money making service.

Oh, wait. I see how it's not making money! It's too busy shelling out the millions to the "content industry" for their extortion fees to play their wares.

They're getting paid, so it's quite apparent YouTube is making money.

Now, if only Google can sell common sense to people.
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Anonymous Coward, 22 Jul 2009 @ 5:45am

Re:
I somewhat agree, however, I'd like to grant a company that hasn't been questioned as a monopoly by the courts, or received a complaint in the Courts of being a "Monopoly" in their field within the past 20 years, or could qualify in a court of law today as a potential monopoly in any of their lines of business in a court of law, cable entity, or a company directly have the ability to purchase or lease on a 50 year basis, 40-50MHz of spectrum on cable networks for their own private use, if said cable-based spectrum is unused and available.
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yozoo, 22 Jul 2009 @ 6:11am

huh?
"Either way, hopefully we can put to rest the silly idea that YouTube is some sort of blackhole for money"

Just cause GOOGLE says so?
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Anon, 22 Jul 2009 @ 6:33am

Re: Re:
You Said: "As a stand alone product, YouTube is a huge money loser. Pushed around inside the Google system using Google resources (with internesting account effects of internal sales), there is potential to say that it is a net nothing to the bottom line."

I'm sure you work for Google and have some data source citation that you simply forgot to include that shows these facts. Or are you like everyone else and simply ASSUME you know their cost and revenue structure?
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Dark Helmet (profile), 22 Jul 2009 @ 6:34am

Re: Re: Re:
Disclaimer: I generally approve of Google, but only compared to the way other ginormous firms operate.

"Please enlighten us to when Google has never been. As the current CEO has stated many times, they're NOT going to make the same mistakes Microsoft did."

...er, you're taking the word of the CEO of the company in question as evidentiary proof of the company's honesty? Or maybe I'm misreading that. In any case, there have been plenty of allegations against Google for dishonest practices, some ringing more true than others. All I did was google (ironically) "dishonest google" and came up with several examples on the first few pages, like on ripoffreport.com, etc. Let's all not pretend Google is some wonderful beacon of light that will never be tainted. They're a company made up of people, and they're bound to have a few fuckups in their ranks. I mean, even the article stated that it seemed like Google enjoyed having people think that something wasn't true; how is that NOT dishonest?

"They've yet to break any laws, until such laws are changed to prevent further "Googles" from taking innovation to the next level to protect idiots who could not do the same."

I tend to agree with you, but don't pretend that point isn't debatable. Plenty of nation's have challenged street view as being against privacy laws (some have one, indicating a record of them breaking the law), other nations have begun the process of exploring court cases to make Google illegal within their borders (http://communities.canada.com/vancouversun/blogs/techsense/archive/2009/03/19/court-case-threatens- to-make-google-illegal-in-canada.aspx). The point is it's debatable, not black and white.
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Chuck Norris' Enemy (deceased) (profile), 22 Jul 2009 @ 6:34am

Compete with us...please!
Google enjoyed having people think that YouTube was such a loser, since it held back competition.

I would think Google would want competition. You never know who might come up with a great idea, start a company, gain traction, then get bought up by Google.
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Anonymous Coward, 22 Jul 2009 @ 7:09am

Ugh, idiots hurt my head. Youtube doesn't make money, that's why Google spends manpower and resources on it all of the time. Google is such a stupid company that will never amount to anything. So stupid stupid stupid. They can never beat anyone in any category.

Also Apple makes crappy hardware and all of their wacky iIdeas are doomed to failure cause they are stupid.

Honda couldn't make a decent car if it hit them on the road.

Microsoft couldn't market their way into a dominant position in the software market through a paper bag.

YOU ARE ALL SO SMART AND OBVIOUSLY BUSINESS PEOPLE AND KNOW OH SO MUCH MORE THAN THESE JERKS! You all should start companies and sell the super smart ideas you have.
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antimatter3009 (profile), 22 Jul 2009 @ 7:36am

Re: Re: Re: Re:
"I mean, even the article stated that it seemed like Google enjoyed having people think that something wasn't true; how is that NOT dishonest?"

I don't understand what your point is here. The article says that Google seemed to enjoy it, but then surprisingly set the record straight. To use your words: how is that NOT honest?

Really, Google isn't perfect (it's not possible to please all the people all the time, etc.), but they're a large step up from just about everyone. They provide many services whose only cost is non-intrusive ads, they support open source (Android, Chrome, ChromeOS, etc.), they generally stand on the "right" side of major tech issues (according to general consensus, anyway), etc.

Also, the link you posted about making Google illegal really has nothing to do with Google specifically. It's about search engine liability, of which Google happens to be one. I don't think arguments being made about search engines in general can really be used as any kind of specific attack on Google.
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Xyro TR1 (profile), 22 Jul 2009 @ 7:37am

Well...
Unfortunately, YouTube has been bending over for the record companies as of late. Countless videos have been "ruined" due to their background music being muted.

Doing this is shooting them in the foot, because it causes many people (like me) to explore other services that will meet the needs of the customer base.

Glad to hear Google is doing well, though. They're one of those "little big companies" that just works well.
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Anonymous Coward, 22 Jul 2009 @ 7:44am

Re:
It is somewhere between arrogant and stupid to assume that everything Google does is profitable. In fact, Google seems to keep insisting they don't make money on news, as an example.

Google has a huge advantage in scale compared to other companies, which mean Their cost structures are different. You just need to read their public filings and reports to understand that.
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TheStupidOne, 22 Jul 2009 @ 8:03am

Re: Compete with us...please!
They won't be able to buy another video hosting site without a huge investigation into antitrust issues
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Anonymous Coward, 22 Jul 2009 @ 8:29am

Re: Re:
Who said anything about "profitable"?

It's a safe assumption that everything Google maintains has benefits to the company, whether its direct or indirect.

Like Google's specialized logos for certain dates. No money in those, but anyone saying that they have no value needs to get some proper marketing education.

Not saying that Google has the Midas touch or anything, but the company has proven intelligent enough to cut away any services that have no value.
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fishbane, 22 Jul 2009 @ 8:50am

Re: huh?
Just cause GOOGLE says so?

I take it you're prefer to listen to people whos' minds aren't clouded by silly little things like actual facts? Granted Google is hardly a disinterested party, and may not be above spreading a bit of fud. But I, for one, pay more attention to what they have to say on their own profitability than random net.trolls.
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Anonymous Coward, 22 Jul 2009 @ 9:36am

Re: Re: Re:
Read an annual report - Google does a very good job of NOT reporting the bottom line on various projects, most of which are still tagged BETA 5 years or more after release. They certainly aren't breaking out the YouTube numbers for all to see.

There is little hope that YouTube in and off itself will ever be profitable, but it is certainly good at getting eyeballs into the Google network. It also helps to defray the costs of datacenters, equipment, and such, providing a great use for their computing cloud that can help write down those costs and make the cloud section more profitable.

At the end of the day, because Google doesn't report the economic impacts of each of their products, there is no way to know. I certainly wouldn't take Google's coy non-statement as anything other than an attempt to tease someone else into the marketplace, screwing them some more (hello Microsoft? Viral videos are a great business! Make money! Tell Bill!)
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Anonymous Coward, 22 Jul 2009 @ 12:19pm

Some of that stuff is tagged beta for really good reasons, and until those reasons are fixed, no matter how long it takes, the beta tag stays on.
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Anonymous Coward, 22 Jul 2009 @ 1:40pm

Re: Compete with us...please!
I would think Google would want competition. You never know who might come up with a great idea, start a company, gain traction, then get bought up by Google.

You mean...like YouTube? ;-)
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..., 22 Jul 2009 @ 6:36pm

Re: Re:
Steve ?
Is that you ?

Please don't throw any chairs this time - ok ...
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Anonymous Coward, 23 Jul 2009 @ 8:25am

Re: Re: huh?
I prefer to see numbers - not an explination on how something that doestn add up to profit is actually profit if viewed from some other perspective?
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User, 23 Jul 2009 @ 9:19pm

Re: Well...
I wouldn't say that they're bending backwards. I think they're just proving a point, like when they delete the music videos that music industries love to complain about. Which pisses off the artist, and their fans. Which then not only retaliate against Youtube (by watching it somewhere else..which just saves Youtube bandwith), hurts the music industry (thus proving Google's point that the music industry is being idiots).

Youtube doesn't have to be profitable.
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