YouTube began at the San Diego zoo in April 23, 2005, when co-founder Jawed Karim uploaded an 18-second clip. No one suspected it would become the standard for internet video service, no one but Google. At a hefty $1.6 million in stock, Google bought YouTube to dubious onlookers. Ten years later, with YouTube’s annual revenue cited as $3.5 billion, one billion users in 75 countries, and in 61 languages; the cynics are mostly gone. Mostly.
Dan Rayburn, an analyst at Frost and Sullivan, a marketing research company, suggests that YouTube may not be as lucrative as one would think, “[…] 90 percent of analysts say it is not profitable.” And continues to say that because YouTube is “user generated content”, viewers go to Netflix, Hulu or iTunes for premium content, leaving a gap in YouTube’s potential revenue stream. “YouTube has struggled to find its core business. The vast amount of content on it cannot be monetized.”
Not all analysts follow Rayburn’s criticism of YouTube’s supposed lack of a clear business model. Morgan Stanley analyst Benjamin Swinburne considers YouTube’s enormous potential as a “high growth, valuable asset”. The Morgan Stanley report listed YouTube’s 2014 revenue at $4.7 billion and if Google is willing to invest in paid and subscription channels, YouTube stands ready to enter its next phase of profitability. But Google’s willingness to do so appears unclear. The internet giant’s reasons may be semi-altruistic in nature: they may want to keep it simple by keeping it free. Says Rayburn, “I don’t think Google wants to monetize all of that.”
“The Google mantra is to help the world and allow anyone to upload anything. They want to keep everything free and open.”
Though the first YouTube clip filmed from the San Diego zoo was dated April 23, 2005, Google is celebrating May 10th as the official 10th birthday — the day of the site’s IPO. After a decade of providing free uploadable video service, YouTube is still the most well-known video service in the world, but where it will be 10 years from now is opening up the door for cynics to walk back in.