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How much is YouTube worth today? (mannhowie.com)
140 points by elephant_burger 5 months ago | hide | past | favorite | 163 comments



I was working at Google when they bought YouTube for nearly $2B, the by far largest purchase at the time.

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.


I remember that too. I remember at the time that everyone was worried Google was going to start adding ads. And they did it so soo sooo slowly. They did it so slowly that even today they haven't been able to do a 30 second forced spot yet, like TV. It's interesting actually, someone should write a book about the way they introduced ads on YT. They did it so carefully that you could tell they were very very carefully balancing not having any protest greater than a few hundred people at any time.

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.


As someone who's been using ad blockers for years and was watching YouTube a long time before ads, it was quite a painful experience suddenly having ads pop up on every video when I started using YouTube on my tablet.

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.


> 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?


Yep, that's the nature of things. I'm 41 but I feel like, I don't know, 26 maybe. But I'm definitely not. If I was 26 right now, I would probably have instagram, fb, etc... whereas I have no social accounts, except, I suppose HN.

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.


>If I was 26 right now, I would probably have instagram, fb, etc...

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.


I read the comment differently. I think it is marvelling at how users who first begin using the internet during a time of pervasive internet ads learn to tune them out, while users who first began using the internet during the time before pervasive internet ads lack this ability. The later group are more likely to block the ads to restore normalcy. The former are more likely to see ads as normal.


It’s not just that it’s different, it’s worse. The Internet in the early 2000s was a magical time of unsustainable sharing.

So it’s not just older == better. The early 90s and before were all shit for video and being bombarded with ads as well.


> unsustainable sharing

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.


It is possible to pay for YouTube nowadays. That will get rid of ads.


If you don't want to see ads, why don't you pay for youtube premium? How else do you expect Youtube to a sustain itself if you wont' block the ads or pay for the premium ad-free subscription?


I now pay for premium, but many YouTubers have taken to do sponsorships. It's getting pretty egregious. There's a YouTube channel I won't name, where every video is a full 2+ minutes of sponsorship, paid content, please click like and subscribe, also we have Patreon, we sell merch. Even YouTube premium doesn't get rid of that.


Those can be manually skipped to some degree by jumping header or speeding up. I wonder if someone could write a browser extension to skip them automatically. I wonder if it could use AI or heuristics, or a crowdsourced database.


Your best bet for skipping this with machine learning would be to use a textual language model and the closed captions.


On desktop you could be interested by this: https://sponsor.ajay.app/


It's just like cable tv, millions of channels and nothing's on. Draped head to toe in ads, and this time its easy to block ads.

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?


people growing up online today would rather skip ads after 5 seconds than watch commercials on traditional television or listen to advertisements on the radio. It isn't odd in my opinion.


Maybe you're not using a good ad-blocker then. I don't see ads on YouTube.


Are there adblockers that work on iPads? Or do you have to use a pihole type setup?


Brave browser blocks most, if not all YouTube ads, one of the main reasons it's my default browser on iOS


Not with the YouTube app, but with the browser, you somewhat can.

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.


A DNS based blocker like pi-hole, nextdns, etc, can't block YouTube ads. Or at least it's very hard to it without breaking something as YouTube often uses the same subdomain(s) to load ads and videos.


I use Adblock Plus on iPhone - can be downloaded in App Store and works fantastically with mobile Safari. I even replaced the Youtube app with a home screen bookmark and I haven’t seen an ad since


DNS-based adblock is mostly, but not totally, effective.


Two 5 seconds ads on youtube feel worse than 30 seconds commercial on tv for a reason. The paradox of having 'free' on demande video you cannot actually watch on demand.. until the ads are over.


What is bizarre to me is that I have one google account and on a PC there are relatively few ads and they only occur after watching one or more videos. However, on mobile or a tablet I find that I have ads even before the first video and they are constant (every 10 minutes of video or so) and offer there’s more than one spot in each break... it's unwatchable so I don’t.


Because it's easy to block ads on PC, even for 50+ people. They can't push it hard there.

But there is a solution for phones aswell, YouTube Vanced. https://github.com/YTVanced


> that you couldn't monetize because people would run to the next platform

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.


I still vividly remember that "uh-oh" sound, it's been seared into my brain.


Lately it's extremely disturbing. Maybe they did it slowly, but now they are pushing it. Too many and too loud too disturbing ads. I finally gave up and now use Vanced on phone and have adblocker on for YT.


They are playing the slowly boiling frog experiment with ads, for sure.


YouTube is the only platform that I've seen 15 and 30+ minute ads on.


Ever been to a movie? There's about 15 minutes of previews before the movie starts. And you already paid for the movie ticket.


YouTube shoves them in the middle of the video in a way the creator clearly didn’t plan for though - cutting someone off mid sentence usually. Though the ridiculous minute/hour long ads have always been skippable in a few seconds in my experience, and I’m pretty sure I’d just stop watching the video if they weren’t.


>YouTube shoves them in the middle of the video in a way the creator clearly didn’t plan for though - cutting someone off mid sentence usually.

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.


I think they do it kind of on purpose. Sometimes I'll put videos on in the background while I cook, do the dishes, or brush my teeth. Then an ad starts, but my hands are dirty and I can't touch my phone for a few minutes. Has me wondering if they pick the moment for the ad knowing that I haven't touched the phone for a few minutes.


I don't recall ever seeing a preview for a single movie that lasted for 15 or more than 30 minutes. However, I've seen single commercials on YouTube that last 15 minutes, and some longer than 30 minutes.


Unskippable too, of course!


This isn't quite the same, but sometimes Spotify gets stuck in an ad loop for me, and I'll get a long wall of shorter ads that can only be removed by restarting the app.


Broadcast television?


Also it’s interesting that Google is the only company (except, perhaps, Amazon), that could pull off running and growing YT. YT is strongly subsidized by getting cost reduction by using shared Google infrastructure. Also billions of dollars where spent for years to support YT without return in sight. Probably the longest, or, at least, biggest, “eventually we’ll corner the market and make it profitable” scheme.


Yeah. My impression from the outside:

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.)


My point is more nuanced:

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.


AIUI, they had to sell. There was no way they could build out the needed infra to maintain the growth rate another year, let alone pay for it.


I thought they had to sell YT because they were starting to get sued into the ground because it was mainly hosting SNL and South Park clips at the time


Okay, agreed.


Same with android, bought for $50M and is now one of the most used operating system globally.

https://venturebeat.com/2010/10/27/google-exec-android-was-b...


Hasn't it made Microsoft more money than Google?


How Microsoft made money from Android is quite interesting, and very ORACLE-like: Microsoft went around threatening OEM companies to pay up for a bag of patents it claimed Android infringed, but wouldn't publicly disclose which patents those were. Meaning OEMs couldn't create work-arounds. The mobile IP-wars were something.


I don't know, but if so, is that relevant? The question was whether or not it was a good deal for Google. It's not zero-sum.


Your argument was it was a good expense because it is popular, yet an uninvolved company is making more, so perhaps the purchase was unnecessary.


Were the objections about the size of the opportunity or whether they could have out competed it with Google Video at a fraction of the cost?


They had a very strong engineering mindset - how many times have you seen in HN about how someone can write an Uber in a few weekends and literally replace Uber. We tend to think it's about the codebase, but it's not. The market position isn't gained by writing a loop and displaying content you're storing. It's literally 0.00001% of the total cost of acquiring customers.


The TGIF doubters were eventually right about later, even more expensive acquisitions that did not pan out, like Nest.


What didnt work out with nest?


Google bought it for $3.2 billion and I doubt it's worth even that much today, certainly not 100x that much like YouTube. It was rumored that Alphabet tried to sell it in 2016 and couldn't find a buyer.


I would have guess it was a success, but not like youtube. Plus with their push on everything is nest, it seems like they are betting on that as a solid competitor

I loved having a nest thermostat and will definitely buy one for my next place


Becoming a paid subscriber for YouTube has been an amazing decision, and I'm so glad to read that 10% of their revenue comes from paid subscribers, while only representing 1% of their user base. It means a paid model could potentially be more competitive than an adtech one!

I sincerely wish more current adtech businesses offered premium tiers.

How much would you pay/month for a really good search engine?


Yes, but why do 1% subscribe? Because everything is on YouTube. Why is everything on YouTube? Because it's free to use. The question then is: how do you keep the flywheel turning without ads?


> Yes, but why do 1% subscribe? Because everything is on YouTube.

There may be also a quite a few subscribing for GPM / TYM. We'll see if that number drops after the migration.


Ask Netflix


Their answer is to spend a little over $17 billion on content this year, ie a little over YouTube’s total estimated revenue according to this article.


Correct me if I am wrong.

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.


I pay as well. They need to get these damn ads off my Xbox (same account as PC) which they have not implemented. Worth it though.


I pay for it too. Basically I use YouTube has a podcast medium. Not sure why, but it works great for me.


They assume YouTube's content costs will scale similarly to Netflix, which doesn't appear correct to me, mainly because YouTube content is largely user generated and I would assume orders of magnitude more new content is uploaded per day than Netflix. I don't know if you could even use Netflix CDN tricks since their content keeps changing constantly.

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%.


The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins.

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.


>The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins.

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 ?


> Youtube has to share it's revenue with content creators, unlike Netflix.

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.


Correct, YouTube has much more favorable (lower) content cost model than Netflix


Youtube has to share it's revenue with content creators, unlike Netflix.

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.")


Netflix content contracts are typically fixed-fee ones (source: https://ir.netflix.net/ir-overview/top-investor-questions/de... section "How do you account for streaming content licensing?").

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.).


> Youtube has to share it's revenue with content creators, unlike Netflix.

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.


Google's production cost is uploading bandwidth and storage. If you look at a single popular video it's easy to think, "Oh, that's nothing." But consider the massive amount of video uploaded that only gets 1 - 10 views over its lifetime.


Some back of the envelope math suggests that a 30 minute video needs about 10 views a month to pay for its storage. So clearly there’s some amount of the popular stuff subsidizing the unpopular stuff but the break even point is much further down the long tail than people realize.


Youtube keeps adding and adding content. Even though storage is nearly free in capex, it still has opex costs.

Netflix on the other hand has small selection, which gets purged frequently.


Isn't YouTube now actively throwing out old content?


Not that I am aware of.

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.


> 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.


Especially since those don't actually remove the files, since there's almost always still a chance to get the account back.


any proof? I can still see my content from 20 years(probably) ago .


Likely no more than 15 years ago, unless you just broke embargo on the Tardis project.

https://en.wikipedia.org/wiki/Youtube


I suspect YouTube would predict the popularity of videos and only cache where it matters (low anticipated popularity videos would be pushed to CDN if they performed better than expected). YouTube-dl in some cases gets my full pipe speed, in others I see it as low as 100kb/s which is evidence to my theory.

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.


I remember in the early days this was very noticeable. Each time you watched a less popular video it would buffer in the beginning.


I experienced the opposite, because YouTube would allow their local caching servers in my ISP's datacentre to get congested. Popular videos wouldn't stream at all, but unpopular niche content was fine because it went straight out to the internet.


>I suspect YouTube would predict the popularity of videos and only cache where it matters (low anticipated popularity videos would be pushed to CDN if they performed better than expected).

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).


There’s probably a bunch of ML they could use. I was just thinking CDN anything from popular artists, or with the string minecraft in the title ;)


I'd guess that, like most platforms, youtube content follows a power law concerning the activities, meaning that 99% of the traffic comes from 1% of the content (or something along those lines). In the Netflix CDN, each node has a fixed library that's restocked at fixed intervals, at least that's what I remember from reading their requirement document for ISPs interested in having a CDN node in their network. The Google CDN is likely more dynamic with nodes having region dependent libraries but nothing that you can't manage.


> I don't know if you could even use Netflix CDN tricks since their content keeps changing constantly.

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.


$168 billion to save a click.

Do click through if you're going to argue it though, HN. There's a lot of working out in there


It would be worth more than that.

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.


that is interesting

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


I think it's hard to value Android given that its monetization scheme (lower CAC for Google Search) really only works for Google.

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.


YouTube and Instagram were already huge brands when they bought but Android isn't. Possibly they can buy other OS (like Palm?) or develop it yourself?


Instagram IG TV and TikTok are video repositories, aren't they? They're not searchable though.


> $168 billion to save a click.

Also note that this is the future cash flow, in a decade (2030).


When I think about the cultural impact of youtube, 168 billion seems cheap. For my kids youtube is TV. I got Disney+ for my kids, but they'd much rather watch youtube.

It also makes a company like Zoom seem overvalued considering they had a similar valuation a few weeks ago.


If google was selling youtube today, would anyone even buy it? How many companies can afford to keep it running? How many would want to ?


You don't have to sell to another company, you can directly sell to the stock market in a spin off.

https://www.cnbc.com/2019/10/29/analyst-alphabet-should-spin...


This would be quite interesting. I don't think both could continue to grow and thrive without each other though.

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.


Chrome?

Google Ads?


Waymo? Verily?


YT is uniquely integrated with Google infrastructure. It can be spun off on paper, but if it’s spun off technologically, its expenses will rise a lot, since right now it gets cost reduction by sharing infra with other Google properties.


> If google was selling youtube today, would anyone even buy it?

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?


Amazon, Microsoft or Chinese power houses like Alibaba, Tencent;

I guess? All of them seems to be capable of working at _giant_ scale.


I'm sure there are a lot of companies with more money than sense that would buy any brand that would make them appeal to the Youtube audience.

Like when Yahoo bought tumblr. A baffling move, and now tumblr's dead. But at least somebody bought it (and not for cheap).


> How many companies can afford to keep it running?

Doesn't it pay for itself many times over with ad revenue?


YouTube is now an ad engine interspersed with some videos between the ads.


I'm not sure if this is a failure of YouTube advertising it, joke intended, but YouTube Premium is the best value monthly subscription that I have. I just recently upgraded to the family plan at $17.99/month so I could add two of my friends.

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 have YouTube premium too. Even though I probably watch more Twitch streams than YouTube, I still wouldn't consider paying for the Twitch equivalent because YouTube has so many useful videos (tutorials, lectures, historical photage, interviews, seminars etc.), while Twitch is 99.99% entertainment. I use the ads on Twitch as deterrence to get me back to watching something of substance instead.


Just get YT Vanced for free for not only the same but even more. I understand that they have to pay their programmers and run the servers etc, but not like this.

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.


> I still am using Google Play Music

Didn't they shut down Google Play Music recently?


It’s just YouTube Music now.


Every single time I get an ad in YouTube (this is on Apple TV) I just hit menu and open the video again. They never serve me ads on the followup request.

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 also depends on the kinds of videos you want. Some creators (namely the very big names) very intentionally opt to include ads (sometimes multiple ads) during the course of their video aka the video specifically asks you to stay tuned after the ad break.

It's been a while since I subscribed to YouTube Premium, but as I recall some of those midroll ads were unskippable.


That's a very reductive (and unoriginal) take.


You should try Youtube on Android some day. You'll agree after a few videos.


Sure, but doesn’t make it a (completely) false statement.


Always felt YT sold itself early because they needed someone with deep pockets to defend themselves from the lawsuits over copyright infringement. Insiders, am I wrong?


I am very surprised to find that Facebook is generating more than double YouTube in ad revenue. I would have expected video ads to be much more valuable.


I remember a story from someone at the time (or maybe I had read somewhere), that their bandwidth bills were so high in the early days, they were asking employees to open up credit cards and use those personal cards to help keep things running.


Am I more valuable to YouTube as a Premium subscriber at £12/month or not subscribing and watching ads?


Article said average ad/user is $8 a year. Even if you're a target user who commands high ad rates you're almost definitely more valuable as a subscriber.


Today, you are likely more valuable to YouTube watching ads. In the latest earnings call Alphabet CFO made the comment:

"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 https://www.fool.com/earnings/call-transcripts/2020/10/30/al...


Premium subscriber. According to this article at least, 1% of users are subscribers and make up 10% of their revenue. I believe a lot of content creators have said similar.


Article says 160bn. I disagree. If google would sell youtube now, no company will have 160bn at their disposal to buy it + all the money needed to integrate it and keep it running. Imagine the HUGE COST associated to disconnect it from other google products.

If youtube would be sold at an auction tomorrow, few companies will come (facebook, amazon etc.) and it will receive way under 100bn.


The more likely scenario would be spinning it out as a separate company in which case it would probably be the biggest google cloud customer for a long while.


No one needs to buy all of a thing for it to be valued at some price. If you buy half for 80B, is that not an argument for the whole thing being 160B? If you but 1/10000th for X, then the same argument works.

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.


It would be sold to the public as a spinoff IPO. But if it were to be sold to another company, it would be an all or partly stock deal to avoid the need for a large cash transfer. Stock deals allow these large valuations.


There's a slight difference between the metric you are referencing vs the author's valuation. The author wants to find out the Market Value while you are alluding to the "Book Value" [0]. Alphabet's Book Value (2019) would be around ~ 197M (699M shares * 283.25 Book Value per Share).

[0] https://www.investopedia.com/ask/answers/how-are-book-value-...


Don't companies just leverage the newly acquired company in order to get the money, these days?

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.


Face book would buy it in a heart beat


I feel like youtube will be better off with facebook than with google. Also, facebook is already putting effort into their Videos.

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


It's kind of money a hostile state would have backed a tech company with to access all personal data.


Like Reddit and China but on a much larger scale.


This nonsense again. If china has control over reddit, how come there are so many anti-china propagandists like you on there? The china subreddit itself is entirely an anti-china propaganda cesspool. Hasn't been anything china related on that sub for years now. Now if you said saudi arabia or israel, maybe there is an argument to be had there. But the china or russia controlling everything narrative doesn't hold up to reality.


If China had control over Reddit, mass-deleting criticism of China would be the stupidest move possible. Everyone would notice, there would be a lot of anger, Reddit would lose a lot of its userbase, and animosity toward China would grow.

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.


Facebook, Apple, Microsoft, Amazon would all buy it


Do you think YouTube ad revenues could exceed Google Search? $15bn YT vs $98bn Search (2019)


If Youtube was profitable I think Google would have broke out its earning. If it isn't profitable now how is it going to profitable in the future and if it is how profitable will it be? Will it have have 90% margins? Same with netflix. These aren't software companies they are television companies, but with software company like valuations.


YouTube's costs are rather entangled with the rest of googles costs. You could hire many different accountants and either find it to be very profitable or deeply loss making depending how much you value YouTube's use of Googles CDN's, network, and infrastructure. It's far more expensive to deliver YouTube video content than it is to deliver say Netflix where the library is tiny and very cacheable in comparison.

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...


If they would do what you say in your last paragraph, they would be cutting off new creators coming to the platform, which would be incredibly stupid since a lot of small time creators that make great content and wouldn't otherwise still make it big on YouTube.

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.


Most their costs are not cdn or video delivery. Its paying content creators.


> Most their costs are not cdn or video delivery. Its paying content creators.

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%.


YouTube can be worth hundreds of trillions today because it has no actual competition.

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.


$15.15B revenue in 2019. But, its worth is way more than that


With ~745MM outstanding GOOG shares, I'll gladly take the 20x P/E ratio over the other _overvalued_ FAANG letters.

I understand if YouTube spins off they might have comparatively lesser shares, but it's an interesting thought experiment. Only time will tell.


tl;dr 168 billion


$168 billion for video streaming website showing mostly ads interrrupted with even more ads? The internet is broken.


I watch more YouTube than I watch TV or Movies period.

I pay for YouTube Premium - $10 a month for no ads. Works perfectly for me.


Is it completely free of adverts, on everything? Whenever it advertises premium to me it focuses on music, which is particularly stupid given it must know I never watch music videos, so I just assumed (and actually thought I had read/heard) it was just for music.


Yes it makes YouTube free of all ads. Another nice feature is background audio continues to play when youre out of the app. Best £12 month I spend. It’s £15 if you pay via the app so it’s better to subscribe when logged in to YouTube.com


> Another nice feature is background audio continues to play when youre out of the app

It used to do that free.


But that wasn't a sustainable business model so it doesn't make sense to expect that.


But amazingly YouTube's entire existence is based on (mostly) free to them user generated content.

Imagine running a company where almost the entire product line is given to the company free.


It still does in non-mobile browser tabs—and my iPad Safari can be set to non-mobile user agent (or whatever, it’s in the settings). So I can listen to YouTube and browse the internet, including HN, on iPad and desktop.

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.


Yup, well worth it for me. No guilty feelings about hurting creators with Adblock.


It's free of ads from youtube. You'll still see in-video ads embedded by video creators.

(It's not like some podcast feeds, where you get a second rss link that has episodes without ads)


Same, at this point if I had to make choices I'd only pay for Netflix/Youtube


90+ percent of your time on youtube is "not" spent watching ads. would you rather these sites all be behind paywalls because you can't handle waiting 15 sec for free content?


> would you rather these sites all be behind paywalls because you can't handle waiting 15 sec for free content?

Yes please. Stop baiting me with some content only to show me the vomit of corporate marketing.


Google acquired YouTube for US$1.6bn in 2006. How much is it worth today?


However, youtube embodies the biggest flaw of internet infrastructure. Centralized authority, many content creators had their entire channels deleted without any recourse. This is a problem because laws are archaic and Youtube has to comply. If it was decentralized somehow then it won't depend on whims and progress of individual governments. Youtube as a company has taken position that they are not going to be the one fight this fight, and they simply comply and over comply to and DMCA request. So what if youtuber gets deleted, there are plenty to replace them.

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.




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