Youtube is already wildly profitable.

Youtube has been running adsense on nearly every single page of its site for a while now.  I was able to do a test campaign that ran on Youtube and  was displayed at the rate of 500,000 pageviews an hour  for the average price of 30 cents a cpm.

 This article says youtubes pageviews are around  250 million a day.  If that is even remotely accurate  youtube is making a LOT of money.   Lets say only 200 million pageviews a day can have ads.   That gives you $300/million   * 200 = $60,000/day  or  $1.8 million a month in revenues from adsense.

I guess everyone at youtube wants the world to think they aren’t making any money so that all the people whose content they are stealing won’t come asking for money.

48 Responses to “Youtube is already wildly profitable.”

  1. Mathew Ingram Says:

    That’s interesting, Markus. But aren’t YouTube’s bandwidth costs rumoured to be $2-million a month? That would suggest they aren’t wildly profitable — although they may be somewhat profitable.

  2. Markus Says:

    Last I heard it was around $1 million a month, at any rate the going rate for their non USA traffic is 30 cents a CPM. We need a updated figure on how many pageviews they are actually doing.

  3. Massimo Moruzzi Says:

    Hi, 250 million pages a day – or 7.5 billion a month seems way too much to me; and even if they steal content, 0.3 $ CPM is not exactly a great price, considering bandwidth costs.

  4. michael webster Says:

    Wouldn’t their USA traffic rate be much higher than .30$ CPM, Markus? I seem to recall you pointing out the big difference between US and Non US traffic rates.

  5. Andrew Johnson Says:

    I would be interested in seeing how much bandwidth they are serving out through video embedding. None of that earns them a dime in advertising — at least not yet.

    Even if they are losing money or just breaking even, YouTube is going to be a very hot ad property because of its high profile.

    Undoubtedly copyrighted video pushed them where they are, but I think the problem is over-rated. Whenever I visit I see loads of entertaining amateur video from the mentos and diet coke to DJ Keltech’s Vader video. On top of that, copyright holders are pushing their videos on YouTube both to generate buzz and judge real user feedback rather than relying on a tiny focus group.

  6. Paul Montgomery Says:

    I’d say YouTube’s P&L statement is significantly more complex than that, and I seriously doubt they would be profitable at all. The best that can be said is that at least they are getting some decent revenue, which is more than can be said for 1.0 businesses.

  7. Can Traditional Media Bridge To New Media Strategies? at Disruptive Thoughts Says:

    [...] Plenty of discussion about online video since the sale. Regardless of whether or not YouTube is already wildly profitable I agree with my friend Howard that YouTube is worth a considerable amount in our changing world. [...]

  8. SoulCast Says:

    Markus, while I usually enjoy reading most of your posts, the sensationalistic headline “wildly profitable” and analysis is grossly misleading. The burn rate might not be as bad as everyone thinks, but they aren’t doing anywhere near 200 million pg/v per day. And consider the overhead of 35 employees in the valley, which alone is $300K+ per month.

    I think you should double-check your sources before crying wolf…

    I wouldn’t exactly call Samuel Van Eerden (the author) or the Cal Chronicle a trusted source.

  9. Markus Says:

    http://evans.blogware.com/blog/_archives/2006/4/6/1864816.html

    “For Sequoia, the attraction has to be YouTube’s traffic, which tops 100 million page views and six million unique users a day”

    Traffic has more then doubled since april. The founder keeps being quoted saying the company makes substancial revenues. For some wierd reason the web 2.0 world keeps saying that youtube has no revenue streams which is clearly NOT true.

  10. zx Says:

    web 2.0 = ?+?*10 = “$$$$$$$”

  11. Sid Says:

    Markus,
    Is the $0.30 CPM the price you are paying? If it is, then it’s not the price that Google is giving to YouTube (Google does not disclose revenue share).

  12. quadszilla Says:

    Their bandwidth bill is huge. Moreover, the ads served to yourtubes are:

    1. Not nearly as relevant
    2. or well placed
    3. or high paying

    as they are on plentyoffish.

    So lower CTR and lower $PC. I would be surptised if their CTR is even as high as 1%.

  13. Dan Says:

    Markus I didn’t know Youtube had adsense on their website. Actually, I have not seen one ad on any given website all year.

    FireFox+NoScript=No Ads

  14. Nick Says:

    0.3 is for the CPM and Marcus actually points to the lowest earnings that this company has, as they also get cpc earnings which are much higher.

    The bandwidth is a big factor, but when you are a big publisher (like them) you get very very low prices. Normally they are paying fixed prices for the lines that they use, not the bandwidth usage (as the rest of us do)

  15. Ehl&Ing Blog » Blog Archive » Macht Youtube doch Gewinn? Says:

    [...] Lustigerweise kommt nun gerade von dem erwähnten Marcus eine Rechnung durch die er auf Einnahmen von 60.000$ pro Tag oder 1.800.000$ pro Monat kommt. Dabei bezieht er sich auf eine Adsense Kampagne die er bei Youtube über Adsense geschaltet hat, zu einem Preis von 0,30$ pro 1000 Impressionen (CPM). Falsch ist natürlich davon auszugehen, dass Youtube die gesamten 0,30$ erhält, die Marcus an Google zahlt. Ausserdem sind viele der Youtube Videos auf anderen Seiten eingebunden, auf denen Youtube keine Adsense Einnahmen erziehlt. Aber trotz Abgaben an Google sollte für Youtube ein beachtlicher “Rest” übrigbleiben. Für den Anfang auf jedenfall eine gute Geldquelle, neben dem Potenzial das Youtube ganz klar hat. Bleibt natürlich noch die Frage was Youtube für die geschätzten 200.000.000 Pageviews pro Tag bezahlt? Fest steht, dass die Bandwith Kosten in den USA deutlich geringer sind als in Europa. [...]

  16. Basic Thinking Blog » macht YouTube bereits doch plenty of fish? Says:

    [...] diese Rechnung stellt Markus, AdSense Krösus mit seiner Singlesite PlentyOfFish.com, auf. Siehe dazu auch das Ehl&Ing Blog. [...]

  17. alek Says:

    Curious exactly how you did this – “I was able to do a test campaign that ran on Youtube and was displayed at the rate of 500,000 pageviews an hour” – i.e. were you tracking *every* single page they display?

    *GREAT* metric and analysis BTW.

  18. mike Says:

    maybe they’d be wildly profitable if they were a Markus disciple. But 50 people in this town burns roughly $1mil/month including normal company building, people, infrastructure costs. Add their bandwidth and they’re not breaking even on your adsense calculations.

    But that’s OK, actually. Because at least they’re not blowing through $2mil/month in venture money, it’s sustaining enough so that they can grow the traffic numbers even more. And the site is totally unoptimized for revenue. Like Craigslist: want a little more cash? flip the apartment listing switch in manhattan.

    It’s *way* early for Youtube revs, IMHO.

  19. Domainers » Blog Archive » Youtube is already wildly profitable. Says:

    [...] Original post by Markus and software by Elliott Back [...]

  20. Life is a venture Says:

    The trouble with Youtube

    Youtube starts to monetize the service with “participatory video ads” plus “brand channels”. Fred has a post on that. Markus thinks they are already profitable.
    The problem is that Youtube videos are often embedded in blogs and …

  21. Michael B Cooper Says:

    This makes YouTube, from an ad revenue pespective, in the same range as a 20-25th market TV station.

  22. Nils Says:

    Please have a look here

    http://www.alexa.com/data/details/traffic_details?&compare_sites=&y=p&q=&size=medium&range=&url=youtube.com

    it will show you how many PageViews Youtube realy has.

  23. Kevin Burton Says:

    Dude….. revenue doesn’t == profit…. I’m sure they’re just using adsense to extend their burn rate.

  24. mad4 Says:

    Even if they are not making a profit this year the hosting charges per user will get cheaper each year as servers and bandwidth gets cheaper. They just need to hold out for a year or two.

  25. Chuchichäschtli - Made in Switzerland » Blog Archiv » Ist YouTube bereits profitabel? Says:

    [...] Interessante Spekulationen von Markus Frind. Gemäss seiner AdWords-Kampagne auf YouTube bezahlte er im Durchschnitt einen TKP von 30 Cent. Bei einem TKP von 30 Cent würde YouTube gemäss seinen Kalkulationen im Moment etwa einen Umsatz von $1.8 Mio machen. [...]

  26. save pluto Says:

    Personally I think that youtube should earn as much as they can since the idea of the site is great. BUT: How will their income increase when they find ways to monetarize the clips in new ways (DVD-Release …)

  27. AlteredWealth » Case Study: Youtube.com Says:

    [...] Cuban’s insights are usually right on, and I think he understands a lot of the potential pitfalls of the site. However, consider this succinct post from Markus Frind, CEO of plentyoffish.com from his blog Paradigm Shift: Youtube has been running adsense on nearly every single page of its site for a while now. I was able to do a test campaign that ran on Youtube and was displayed at the rate of 500,000 pageviews an hour for the average price of 30 cents a cpm. [...]

  28. UZY.nl » Blog Archive » Het ideale business model voor YouTube? Says:

    [...] Menig start-up baseert zijn businessplan op het aanbieden van tekst-gebaseerde advertenties en ook YouTube toont sinds april 2006 Google Adsense op zijn pagina’s. Onderzoek wees uit dat deze advertenties een gemiddelde prijs hebben van 30 cent CPM, wat op zo’n $60.000 dollar per dag zou uitkomen bij 200 miljoen pageviews per dag. Niet onverdienstelijk, maar met video lijkt me veel meer mogelijk dan saaie text ads. [...]

  29. Rich Says:

    Heres my q if they are having 200milion page views a day 175 mil would be vid viewing and on top videos on other site would amount to about 200million videos being serverd every day. That would amount to about 6 million GB of bandwidth a day(@30MB/video avg). That would mean 180million GB a month. With a regular 100Mbps dedicated line the price is about $1000 a month. Say google gets a better deal of $500 a month for a 100Mbps line.

    Since youtube videos are always available I would say that out of a 100Mbps line they are only using about 85Mbps. So each 100Mbps line would be pumping only 688GB/day(traffic for the site is concentrated to 18hours a day) hence getting to feed 6 million GB a day while per 100Mbps can only feel 688GB; that would take about 8720 X 100Mbps lines. Which would amount to 8720 * $500=4.4million dollars in cost a month.

    Hence if google says that they arepaying 1million in hosting that would mean its only getting about 45millionpage views a day. Which is still pretty crazy.

    Considering POF is making 10K a day with 6mil page views say thats POF rev x 8 that would make 80K a day that would be 2.4mil a month that they make. say they pay 1.8 mil for bandwidth and servers and 35monkeys to work they are making about .6 mil even in that scenario.

  30. Blake Says:

    There is no doubt YouTube is making money. Right now, Google Video has the capabilities to handle all of the video storage and bandwidth required. My understanding is that Google will allow YouTube to be it own identity allowing to flourish as it is. However, I am sure they will impose their standards of operation which may change YouTube. But I think this will put Google Video to the top of the poll.

    See for yourself: http://todayspolls.googlepages.com/google_video_poll

  31. Matt Says:

    There revenue source is strong however, they are losing money with bandwidth costs.

  32. Jasmine D Says:

    I am just starting out how can I make that much?

  33. Will Sullivan's Journerdism - Online journalism, multimedia, web design, media changes and all things nerdy. Says:

    [...] Youtube is already wildly profitable. “If that is even remotely accurate youtube is making a LOT of money. Lets say only 200 million pageviews a day can have ads. That gives you $300/million * 200 = $60,000/day or $1.8 million a month in revenues from adsense.” … in the comments “That’s interesting, Markus. But aren’t YouTube’s bandwidth costs rumoured to be $2-million a month? That would suggest they aren’t wildly profitable — although they may be somewhat profitable.” [...]

  34. RyanBlakemore.com » Blog Archive » YouTube overlay ads because of partner pressure Says:

    [...] is just my estimate, other sources suggest that the situation might be much worse. On the Plentyoffish blog, Markus says that just over a year ago, he was paying just 30 cents cpm for ads on Youtube. Using [...]

  35. Don Says:

    According to Alexa, YouTube is now the 8th most popular website in the US, the 14th most popular site in Japan, and the 11th most popular site in the UK.

    The biggest problem facing YouTube is that, according to Business Week and other sources, the site has to shell out between $900,000 and $1.5 million per month for costs associated with computer servers and the massive bandwidth required to display all those videos.

    As a result of these costs, the Economist reports that YouTube is losing around $500,000 per month.

  36. Vishal Says:

    It cant be 30 cents CPM as now Google owns it – so more goes in their pocket…. probably double!

    For those aspiring people wanting to get site traffic and make money with videos on Youtube and Metacafe etc, read this detailed step by step instruction … http://www.successonline.in/driving-traffic-from-youtube-and-your-videos/

  37. Tom Lee Says:

    Youtube cost in bandwidth $12 Mill month, it almost went broke before Google purchased it, actually there are already some ads displayed in Youtube to earn revenue.

  38. Michael Stevens Says:

    I have several promotional videos on You Tube for ezdate123 and royaltyfree stock photo gallery…. Both are my websites. The videos are getting a fair amount of views and we are seeing modest traffic from the link back. The up side is the videos are not expensive to make and they air for free but the return seems minimal…I realize some have millions of views but most people do not turn that into a revenue stream. I was wondering if anyone here has had any success with You Tube videos… either in views and.or traffic to your website(s)….. thanks, MIke

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  40. Shawn Sears Says:

    youtube is great

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  47. Ist YouTube bereits profitabel? | A Swisspreneur Says:

    […] Spekulationen von Markus Frind. Gemäss seiner AdWords-Kampagne auf YouTube bezahlte er im Durchschnitt einen TKP von 30 Cent. Bei […]

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