That is week's TGIF had incredulous engineers questioning the decision, and Larry explaining that it was indeed steep, but that he saw incredible potential.
He was right yet again.
That was essentially the major reason people thought it was a bad deal - that you couldn't monetize because people would run to the next platform, I mean it was essentially a doomed business idea because the belief was you couldn't get the advertising dollar above the storage and staffing costs.
This isn't just YouTube though, the internet as a whole has slowly shifted in the direction of more ads and more pay walls. I get it, but as someone who vividly remembers the internet before ads and pay walls I still find it odd how people growing up online today just seem to accept it.
I find this odd - you're saying that you're only fond of the way things were when you grew up, but that it's odd how people growing up now accept their own reality?
I have literally no way of knowing what it would be like to have been born in 1994 instead of 1979... it's so crazy how fast things change. What would it be like if the internet was just a given when I was born instead of getting on BBS's and then the internet slowly leaks in.
Lol no. Not if you're a nerd, anyway. You'd mostly be on Reddit and HN. ; p The only people left on Facebook in the West are around your age.
Get Discord and Spotify and you're all caught up.
So it’s not just older == better. The early 90s and before were all shit for video and being bombarded with ads as well.
Indeed, that was another point I wanted to make but refrained from. Having so much content and functionality for free, with absolutely no cost (like your data being mined for pofit) is simply unsustainable... In a way, the early 2000s were the odd time, not today. Maybe that'll look different when/if humanity manages to overcome the major issues we face today and we reach an age of plenty.
How long until the streaming services become comglomerated into one or two cable-like packages? Can't be long now and it will break apart again and reform over a hundred years with better tech ... again, maybe?
I used adguard and it works for like 80 to 90% of the time. For the time where ad did show up, I just reload the page and it is gone.
But there is a solution for phones aswell, YouTube Vanced.
My anecdotal experience with ICQ in the 90's was the same. It was dominant, but when they updated to include a modest banner ad at the bottom of the message window, a substantial number of my friends took that as the last straw and moved (mostly to MSN). A shame, since ICQ was a pretty decent messenger for its time.
It's possible for the creator to manually place ads in the middle of the video or to let YouTube automatically place them. In both cases you will likely get ads that are in the middle of a sentence, because the ad placement tool is poor. It can be laggy and imprecise, but most frustratingly, it tends to break if you play around with it for more than 30 seconds. At that point you lose track of where you were and have to do it again. It's been broken like that for a long time. My guess is that the state of that tool is part of the reason why creators don't place their ads precisely. Going from a full fledged video editor with great seek and all that, to a poorly functioning web UI is very frustrating.
It's largely been the advertising people/tech that has made Youtube profitable. Not infrastructure effectiveness. (Sure, I imagine infra cost effectiveness was very important during a few key growth years pre-acquisition.)
YT is worth so much because it is a monopoly. To make it monopoly it is today, Google had to have: extremely deep pockets, efficient infrastructure. Very few other companies could have accomplished that.
I loved having a nest thermostat and will definitely buy one for my next place
I sincerely wish more current adtech businesses offered premium tiers.
How much would you pay/month for a really good search engine?
There may be also a quite a few subscribing for GPM / TYM. We'll see if that number drops after the migration.
The 10% of revenue from Paid Subscribers comes with Youtube Music for free. So people are not really subscribing to YouTube Ad Free. They are more like like buying Youtube Music and get Ad Free Youtube as a Bonus.
Which would have been perfect if Youtube Music was actually any good, But it is not. It is even worst than Apple Music.
Considering pretty much every YouTube video I see these days is uploaded in 1080p or 4k, these costs would start to matter eventually.
I wonder how this affects their operating margin, considering this article calculates it to be between 5-18%.
Just look at the debt load of Netflix.
The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service.
Also you can never compete with the viewer numbers between a product that is paid versus free so the most that YouTube has established is clearly much greater and visible in that it has no direct competition in the user generated video space for 15 years until perhaps maybe tiktok but tremendously different platforms.
Meanwhile Netflix has competition from Amazon Prime, Disney, Hulu, HBO, and others.
Youtube has to share it's revenue with content creators, unlike Netflix.
>The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service.
Does this hold true for constantly changing HD video content, unlike traditional media ?
From a financial modeling perspective, that’s more akin to a tax paid by YouTube than anything else, which makes it easy to plan for. That’s not the case with Netflix, which has all sorts of competition bidding up costs and making content costs much more difficult to predict per unit of revenue.
I don't know if this is true.
I can't say that I know the inner workings of any of the Netflix contracts, but in entertainment it is common to not only pay to acquire the rights to display the content, but then to pay again for each time it is viewed.
Sometimes it's paid monthly or yearly. In other cases (broadcast television, for example), it's part of the negotiating process for content renewal. ("Oh, the ratings for our show on your station are up 40%, so we want more money to renew.")
The providers of course generally want more money the more popular a title is (though Netflix does not usually disclose viewership numbers so they may have to rely on Nielsen etc.).
Depends on the contract. That is why you see more and more content produced by Netflix, where they control the complete chain. However, producing Netflix content has an initial cost, but producing YouTube videos does not (for Google) and the videos are monetized only if the number of viewers are increased. Which also increases ad earning to Google.
Google might be in a much better position here regarding streaming quality (or traffic reduction control). You get YouTube videos for free and even if you request HD content, you don't have to get it every time; no one can complain because it is free. However, for Netflix, you pay for HD quality and you expect that almost always.
Netflix on the other hand has small selection, which gets purged frequently.
It is possible that they are throwing away different quality transcodes of old and unpopular content and regenerating on the fly if needed. But my understanding is that videos are never automatically removed.
Unless the video trips some automated DMCA thing, or the owner of the video account runs afoul of some inscrutable algorithm, or journalists start asking about disturbing videos aimed at children, or...
But yes, probably not to save money on storage.
That being said the data storage problem they have is insurmountable. I don’t think they ever delete low view-count content, so I’d be curious to know about their storage tradecraft.
That's actually a really interesting point, because YouTube can (partly) decide which video will become popular. They control what shows up as a suggested video, what appears at the top of search, what shows up in the subscription feed (unless the subscriber has clicked the bell icon).
Netflix CDN tricks like preloading content during non-peak hours probably doesn't work for YouTube; afaik, they don't have the same sorts of content available before publication date.
However, Google has a CDN appliance program too, and read-through caching works pretty well.
Do click through if you're going to argue it though, HN. There's a lot of working out in there
It’s per user revenue is low and can be increased to $20 as author notes.
Today’s market values growth over everything and since they are profitable they will get a steep multiple.
Markets are irrational and trade on momentum.
The valuation provided is more of the floor than what it would trade based on growth expectations and general excitement.
Unlike FB which has competition from Twitter and Snapchat and would be suffering had it not acquired Instagram, YouTube itself has no direct competition in its space.
More likely it would trade at $250-350b
Either way it along with Instagram are the two best acquisitions in modern tech history.
claiming YouTube and Instagram are the two best acquisitions in modern tech history is one heck of a claim
Android instantly beats them both COMBINED
That being said they would definitely be in theTop 10
If any company other than Google owned Android, it might not have been funded so well for so long, all while giving it away for free.
Also note that this is the future cash flow, in a decade (2030).
It also makes a company like Zoom seem overvalued considering they had a similar valuation a few weeks ago.
Android, Youtube, Google Search, Gmail and Google Maps feel like the only things that keep Alphabet relevant.
Google search ads appear to be a losing battle with uBlock, pi hole, etc. I also think a significant portion of their users have trained themselves to skip the results marked as Ads altogether when looking for results. The saving grace in this space has been the mobile landscape where they can be gatekeepers to prevent ad blocking.
Alphabet/Google has already been walled out of most social spaces, Tiktok, Snapchat, Instagram (not entirely), WeChat, and WhatsApp.
Youtube is fairly unique with the ability to embed the ads within the video stream itself.
It is technically possible on the technological side, but at what time and effort cost? It would be a lot of effort to break apart all of the infrastructure that YouTube has that is general Alphabet infrastructure.
My understanding would be their costs would both go up as well because their volume would decrease as standalone entities.
It would be a bold & interesting change but I don't foresee it in the near future unless DoJ breaks them up.
Of course. It's the premier video platform not just of the US but the world. And it's only going to grow.
> How many companies can afford to keep it running? How many would want to?
Every major company in the US. And every major international company around the world and maybe even governments around the world would want to buy youtube. But I highly doubt we'd let a foreign company get control over youtube. Youtube is important enough to be a national security matter.
Google is known for shutting down products left and right. It's kept youtube around for 15 years. That, in and of itself, should tell you something. Youtube is one of the world's most valuable/important products right now. You think no one would be interested in buying it?
I guess? All of them seems to be capable of working at _giant_ scale.
Like when Yahoo bought tumblr. A baffling move, and now tumblr's dead. But at least somebody bought it (and not for cheap).
Doesn't it pay for itself many times over with ad revenue?
That's ~$6 per month to enjoy YouTube completely ad free, allows you to download YouTube videos to your phone for offline viewing, allows background play, _and_ gets you YouTube Music Premium(I still am using Google Play Music, but this is basically a "free" Spotify subscription) as well.
Its such a good value for me and I think it'd be a great value to a lot of other people as well but every time I mention it I feel like people have never heard of it.
I buy a highlighted message in a stream every now and then or "join" a channel. But I won't ever accept to pay just not to have ads in front of my videos just to hear the guy saying this is todays sponsor, no.
Didn't they shut down Google Play Music recently?
Perhaps as a result, I get very few ads when I use YouTube. Maybe 2-3 ads per week. I go to a friend's house (also Apple TV) and every video they open they have to wait through 2 ads to watch it. Even with the same videos as the ones I watch.
Maybe I've found a loophole in the system?
It's been a while since I subscribed to YouTube Premium, but as I recall some of those midroll ads were unskippable.
"both YouTube Music Premium and YouTube TV do have higher content acquisition costs as a percentage of revenues than YouTube ads and we are early there continuing to build out that subscriber base."
YouTube still pays out the majority of subscription revenue to publishers based on viewership but likely must also pay out more to music creators and labels. This is also not counting the costs of its original content.
Q32020 Alphabet CFO earnings transcript
If youtube would be sold at an auction tomorrow, few companies will come (facebook, amazon etc.) and it will receive way under 100bn.
2019 Revenue > $15B. It's not uncommon for companies to worth 10x revenue. In fact, when I do a first pass at company worth, 10x revenue is where I start.
For an experiment ( which I have done), take all publicly traded companies, take their market cap and their revenue, divide, and you get pretty much 10x. Check standard deviation to get even more knowledge about this simple company valuation estimate.
This alone makes it plausible $160B is in the ballpark. Considering the parent company is worth $1.2T, YouTube being worth 0.160T is not that ludicrous.
The Glazers (or whatever they're called, the US owners of Manchester United) loaded up Man Utd with a lot of debt from... the acquisition of Man Utd. They barely used any of their money.
I noticed external youtube links no longer get viewed inside facebook, it's probably another step to make their users (facebook) prefer Facebook's videos than youtube
Much better to just gently push toward the preferred path whenever a decision comes up. Which is possibly what they actually do with their smallish influence on Reddit. That way things would likely be better for China than they would have been without the interference, rather than likely being worse.
Having said that, YouTube could quickly pivot to profitability if they simply said "any video that gets less than 1000 views a day will be deleted". And if they could suppress the inevitable user revolt...
Hiring people to do content instead couldn't replace that and hosting costs for small videos are not the biggest factor, I'm pretty sure.
if you're talking about youtube here (it's not clear from your context), youtube is paying content creators with 55% of revenue from an ad (since YT takes a 45% cut).
But YT only pays out when there's some $100 dollars of accumulated revenue for the content creator - hence there's also some arbitrage interest income that YT gets to earn 100%.
I am actively using `youtube-dl` and trying to find videos in DailyMotion and Vimeo. It's tough and I easily relapse back to YouTube but it helps me to think that any and all denied ad revenue is a protest enough that would eventually be noticed.
I understand if YouTube spins off they might have comparatively lesser shares, but it's an interesting thought experiment. Only time will tell.
I pay for YouTube Premium - $10 a month for no ads. Works perfectly for me.
It used to do that free.
Imagine running a company where almost the entire product line is given to the company free.
I use most services through their web interface, because I’d rather not use their apps. Though many services such as Instagram stopped making that possible so those I have no choice.
(It's not like some podcast feeds, where you get a second rss link that has episodes without ads)
Yes please. Stop baiting me with some content only to show me the vomit of corporate marketing.
Perhaps this should also be seen as monopoly, who is a competitor to Youtube? nobody! May be had there been one, Youtube would have been more eager to please content creators and lobby to change laws. Despite exclusively benefiting from most internet user generated content, Youtube has decided to not fight a battle with lobbyists of other industries. They are in position and backing, but they are choosing a path that is focused on short term benefits and keeps ad publishers happy.