
YouTube: 1B Viewers, No Profit - msoad
http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967
======
mapt
"The results reflect YouTube’s struggles to expand its core audience beyond
teens and tweens. Most YouTube users treat the site as a video repository to
be accessed from links or embedded video players posted elsewhere, rather than
visiting YouTube.com daily. Google executives want them to turn on YouTube the
way they turn on television, as a habit, where they can expect to find
different “channels” of entertainment."

If they want me to sit in front of this as passive entertainment, why not
_start_ by giving me an interface to view my subscribed content, in order, as
an RSS-reader-like experience? I should be able to hit 'play' and have it scan
through all the new videos on the channels I am subscribed to, without hitting
'click to skip' length ads, going into a mysterious related videos algorithm,
or manually navigating through a list and clicking on each one.

For that matter, I should be able to interface with a channel in that way
regardless of whether they have created a playlist or not, using 'autoplay in
order of upload'.

If you wanna get _complicated_ , give me a search functionality that will do
the same. 'Autoplay feed of anything mentioning Minecraft mod XYZ in the
title/description'

Right now, Youtube has a nominal subscription function that actively deters
you from using it smoothly. Fix that before you assume you can't turn it into
a 'habit'.

~~~
JonnieCache
_> why not start by giving me an interface to view my subscribed content, in
order, as an RSS-reader-like experience?_

Can you _really_ not do that? I've never had a youtube account. The plan at
the back of my head to build a hideously boring looking "advanced" interface
for youtube is creeping forward...

~~~
Joona
There's this:
[https://www.youtube.com/feed/subscriptions](https://www.youtube.com/feed/subscriptions)
Which displays the videos the channels your subscribe to have uploaded (newest
first).

~~~
deelowe
Actually, that list is filtered based on arcane rules. I think it tries to
guess what you want to watch based on previous engagement rates or something.
Point being, you may be subscribed to a channel and not see new videos show up
in that feed.

------
davidiach
I would add that part of the reason YouTube is struggling is because it has
become a pretty lousy product for today's standards.

\- comments are completely broken

\- finding stuff is a process of trial and error

\- too many invasive ads

\- no pleasant surprises; every time I open Facebook or Twitter I find
something new that interests me, which makes me wanna come back, not so with
YouTube. In fact I might find better pleasant surprises opening the homepage
of Amazon.

~~~
onion2k
Those reasons would explain why the product is failing but the product isn't
failing. It has 1bn viewers and $4bn revenue. By any measure those are signs
of a very successful product offering.

Youtube's problems are that their costs are too high. If you have $4bn coming
in, but providing the service to generate that $4bn costs $4bn, then you need
to do things to make your business more efficient. It really is that simple.
Making a "better" product won't change anything if every dollar you bring in
still costs a dollar to service. You'd just push the revenue up and still make
no profit.

~~~
gearhart
> Youtube's problems are that their costs are too high.

Is that true? I'm definitely not saying it's not, but it's not self-evidently
true.

Is $4 per user per year a lot to pay for being the platform they watch video
on?

I agree with your point that their challenge is not about making their product
more attractive to new users, but an equally valid conclusion would be that
their problem is that their product isn't generating enough value per user, so
they can't ask enough value in return - which would be a product design
problem, or that their product is generating significantly more value for its
users than it's managing to demand in return, which would be a "monetisation"
/ revenue stream issue.

~~~
michaelt

      Is $4 per user per year a lot to pay for being the 
      platform they watch video on?
    

If the billion viewers are watching hours of HD video every day, it's a great
price.

If the billion viewers include anyone who has viewed a single video at any
quality in the last 10 years, it's a lot less impressive.

------
gokhan
We don't have a TV unit in our home. People in their 30's or older find it
awkward. Kids under 15 absolutely don't care about it, they always have
something waiting to watch on YouTube and they consume it using whatever
device they have access to.

My 2.5yo can open YouTube app on whatever device she finds on the coffee table
and usually find content through suggestions. 8yo already got banned from
YouTube by watching excessive amounts of Minecraft videos, until summer.

We hosted a reunion event for kids of close and distant relatives during the
semester and 1/4 of the day spent on YouTube, a stat based on 5 kids ranging
from 2.5 to 11.

I don't see any other platform reaching every kid in the world other than
YouTube. Are there any? Google will sure monetize it better than today, all TV
entertainment in the future will be consumed through companies like YouTube,
Twitch etc. It's easier to see it if you live with younger people.

~~~
duiker101
> 8yo already got banned from YouTube by watching excessive amounts of
> Minecraft videos, until summer

How? I keep youtube in the background for music almost all day and didn't know
you could get banned for "watching too much"

~~~
skc
I'm interested in knowing what trick you use to keep youtube on in the
background for music.

I listen to Jazz and this sounds like something I need to know how to do

~~~
meadhikari
Streamus A chrome extension has been working great for me.

[https://chrome.google.com/webstore/detail/streamus/jbnkffmin...](https://chrome.google.com/webstore/detail/streamus/jbnkffmindojffecdhbbmekbmkkfpmjd?hl=en)

------
ZeroGravitas
Isn't a bit magical to grow a $4Billion a year business and end up spending
exactly that amount to run it? I know this gets talked about a lot with
regards to Amazon, but do the people running Youtube actually get any extra
benefit from being profitable?

~~~
shubb
So magical it might even be a tax dodge... a lot of companies have a complex
structure where some business units are optimized for tax, and other deliver
services. They take the profit in the tax optimized units. That might be part
of what is going on here...

------
InclinedPlane
YouTube is an astounding platform with a remarkable social relevancy that many
people over ... 25? or so probably don't appreciate. Even more astounding is
the degree to which google consistently drops the ball in regard to its
development. Much of its success has come in spite of, rather than because of,
major changes and "features" google has made to the site. Partly that's
because of google's almost pathological inability to develop a real product or
to manage a serious customer relationship (where the end-users are also the
customers, rather than the merchandise).

At this point I hope merely that google doesn't do anything that inadvertently
destroys whatever magic is happening at youtube before a diversified field of
real competition exists elsewhere.

------
venomsnake
Remove Content ID and require manually filed DMCA notices. You tube will surge
to the top in no time.

~~~
misnome
Beyond the tech circles, I bet nobody really cares about this at all.

~~~
fpgeek
I'd make a stronger statement: Outside tech circles I'd bet that, in practice,
the vast majority of YouTube viewers would abandon it in droves if YouTube
removed Content ID. I'm sure they don't like Content ID in the abstract (and
plenty may be frustrated by personal encounters with it), but I bet most of
them care far more about the first-party content on YouTube from the
entertainment industry that the Content ID "treaty" has made possible.

~~~
venomsnake
Yeah. I love the gray screen with a smiley face - this is not allowed in your
country.

I have spend so much time enjoying the content. Also content ID take a lot of
parodies and analyzes and gaming reviews.

------
hurin
_By comparison, Facebook Inc. generated more than $12 billion in revenue, and
nearly $3 billion in profit, from its 1.3 billion users last year._

I didn't realize Facebook had such a small revenue figure - could anyone
explain their market cap in that regard? It's highly unusual.

~~~
InclinedPlane
Their market cap is based on fantasy (but which growing tech company's isn't?)
Facebook's valuation is founded on the nebulous idea that somehow facebook's
combination of tech talent and userbase will result in massive profits in the
future. Meanwhile, facebook managed to game the IPO system deftly and extract
a huge wad of cash from investors (and win a massive payoff to its early stage
investors), it took almost a full year for the market valuation of facebook to
get back to a state where the folks who bought in early to the IPO could
finally pass their stock off to other suckers without taking a loss.

------
Coding_Cat
It should be noted that all of this is based upon "a person with knowledge of
the figure". It's easy to manipulate these kind of numbers, and Google might
very well have an interest in doing so.

For example, they might attribute the costs of building a new data-center to
their YouTube branch, but actually use it for all their services. And they're
probably not making their collected data on you into account.

Why might they do this? To make their main business seem stronger at the
expanse of YouTube for whatever reason, to help justify lower CPM on YouTube
content, because admitting that data-mining your customers is your long-term
plan is generally not a smart idea (even if you're Google and people should
know by now).

~~~
seanmcdirmid
I don't think they do this or are allowed to do this. They can of course, not
break out earnings by division if they want, but if they do, I don't think
Hollywood accounting is permitted or useful.

There are other ways to play this; e.g. microsoft once included MacBU (very
profitable Mac office) in E&D (xbox...). But at the end of the day, it doesn't
really help anyone.

------
msoad
To get around the pay wall, do a google search for title or follow this link:

[https://www.google.com/search?q=YouTube%3A+1+Billion+Viewers...](https://www.google.com/search?q=YouTube%3A+1+Billion+Viewers%2C+No+Profit)

~~~
heinrich5991
This does not seem to work for me.

~~~
scrollaway
It relies on the Referer [sic] header, so if you are blocking it or copying
the link and opening in a new tab, that won't work.

Either way, this is a lousy 2-paragraph article that says YouTube isn't making
a profit and Google hopes the Music Key program fares better.

------
chinathrow
No profit? A shitload of interlinked meta-data about what and how we consume
media.

Of course that isn't laid out in $$$...

------
iagooar
Actually making no profit, but at the same time not losing money is "good
enough" for a company like Google. The massive amount of users allows for
analyzing behavior patterns and increasing the profile information that later
on is used to improve targeted ads like adwords.

Not only this, but being able to have a larger pool of employees without
losing money has its own benefits, like easily reallocating the best
performing or fitting people on other, more profitable projects or urgent
problems.

~~~
fpgeek
It's not that simple. Breaking even may be "good enough" strategically for
Google, but, tactically, it is a problem for YouTube and everyone that works
on it. The harder it is to concretely demonstrate YouTube's value to Google,
the harder it is to make the case for investing in YouTube, rewarding
employees competitively, against unwise cost-cutting and so on. Things don't
fall apart overnight, but over time...

------
Aoyagi
Maybe if the site wasn't a bloated mess of useless or barely working features,
people would be willing to turn off their adblocks.

Plus I bet they do get their money through some tax loops or some other form
light money launder.

If not the money, they do get gigantic userbase they can harvest for data,
unlike G+.

------
Morphling
"to read a full story" and I didn't actually even care...

~~~
izietto
_Log-in in order to read the full article_ is really bad to me

------
arfliw
It's not that there is a lot of junk on YouTube. There is a lot of junk on my
900 channels of TV, too. But I have a handful of go-to channels, DVR and a
huge schedule showing me what's happening across all of those channels.
Problem solved. YouTube has none of those. That's why I use YouTube exactly
like they said, I'm linked to it elsewhere. Or I go and search for something
specific.

Discovery is the problem. Not a lack of quality content.

------
MrBuddyCasino
I suspect Youtubes main opex is bandwidth. So it all depends on how traffic
costs develop over time in relation to advertising revenue. Could this be a
motivator for Google Fiber? By cutting out the middlemen, they can lower
running costs for their own services.

~~~
Joona
Definitely. They try to compress the videos as much as they can, load comments
only if you scroll down etc.

~~~
icebraining
I doubt lazy loaded comments have anything to do with bandwidth concerns - a
page full takes less than a single frame of video. Most likely, it's to avoid
internal IO, especially now that they're pulling comments from Google+ as
well.

------
Joona
Why does Youtube not have pay-to-watch channels, or just the ability to
"donate" to channels? This is a huge deal on Twitch (channels have thousands
of paying "subscribers").

~~~
TazeTSchnitzel
It does have them actually, but (somewhat understandably) nobody uses them.

Off-site schemes like Patreon are far more popular. That allows people to
donate a small amount monthly, or a small amount per piece of new content.
They get incentives (à la Kickstarter) to donate extra.

Patreon has addition appeal possibly because it doesn't make you entirely
reliant on Google for your income. Even those making millions of YouTube get
shitty support and could have their channel kicked off YouTube (or pulled out
of the Partner Program) at a moment's notice for no good reason, with nobody
to complain to if that happens.

~~~
Joona
Patreon-style payments are what I meant by donations, but I guess people just
won't trust Google enough for that.

------
fpgeek
This really puts the whole Music Key controversy in perspective.

If YouTube isn't making money, then of course they're going try to alter their
deals, no matter how many indie musicians it pisses off.

------
unicornporn
So, how can I read this article? I get "To Read the Full Story, Subscribe or
Log In" even when viewing the page in a clean session.

