DESPITE BEING ABLE to bring in billions of views every day and having more than a billion users, YouTube is still having problems making a profit
While its revenue has increased to $4 billion last year, up from $3 billion a year earlier, the company’s bottom line is, at best, “roughly break-even”, according to a report from the Wall Street Journal.
The reason given is that most users arrive on the site via links or watch embeds instead of visiting the site directly. That limits YouTube’s ability to offer targeted ads, especially on the home page and makes it less appealing for advertisers to invest in the platform.
It’s also having problems expanding its service to appeal to those outside the kids and teen demographics, changing its image from a video upload service into its own station where people can find different channels with shows and videos of interest.
The service is also facing increased competition from the likes of Facebook and Twitter who are building their own video services, and premium services from the likes of Netflix and Amazon who are producing original shows and films.
At the Code Mobile conference back in October, YouTube’s CEO Susan Wojcicki said it was noticing a model where consumers would either pay for content or choose ads instead. That came in the form of YouTube Music Key, a service which allows users to pay a monthly fee to download and listen to music and videos outside the app.
The service is invite-only and still in beta, but it removes ads entirely and provides access to Google Play Music.
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