logo
logo
Sign in

How does YouTube Make Money? Understanding YouTube Business Model

avatar
Harrris Bradley
How does YouTube Make Money? Understanding YouTube Business Model

Ever wondered what triggered Chad Hurley, Steve Chen & Jawed Karim, former employees of PayPal, to create the monster that the YouTube has become today? Well, as admitted by Karim, it was the Janet Jackson wardrobe malfunction at Super Bowl & Tsunami later that year that inspired them to present the idea that there must be a central space on the internet to share & view all kinds of videos. As fascinating as it sounds, the idea received a capital of about $11.5 million straight away from Sequoia Capital back in 2005. A few months later, Karim uploaded the first ever YouTube video named “Me at the Zoo”.

After contacting major companies to put their content on their platform, soon they had views numbering in millions. This was a peak time for tech giant & biggest search engine Google. Just a year after its invention, with merely 65 employees, Google acquired the YouTube for a whopping $1.65 billion& ended the long-running headache of a question that is how does YouTube make money. While its growth is a history, we take a look at the business model they followed in the past & the changes they brought to make it the giant it is today.

YouTube history in brief

After Google’s acquisition, the website picked up a massive popularity. They had a tech giant as their parent now. Rightfully, they were the first platform to introduce HD streaming. In 2009, they launched a 1080p resolution along with partnering with many TV channels that aired their shows on YouTube for viewers to see at any time. But it was 2010 when they first launched ads and this was how everyone came to know how does YouTube make money. Starting from a video streaming website, the YouTube had now started to challenge TV in terms of viewership. This meant that they had to follow the same monetizing plan as the TV channels – the advertisements. YouTube quickly recognized the emergence of vloggers on their website. In order to get new and creative content, they had to attract the content creators. So they introduced monetizing for content creators based on the ads that would pop up on their videos.

This is how it worked. How does YouTube make money had a lot to do with the content they were serving on the platform so they kept a certain minimum requirement of viewership for any video. Once that number of viewership was reached, they allowed ads to pop up in that video and some share of that advertisement money would now go to the content creator as well. This was financial trading. Many trade pundits call this as a masterstroke as they didn’t have to pay anything from their pockets.

Since the viewership was massive, content creators started to focus on putting their art on YouTube. It was impossible for many artists to get featured on TV or in movies but relatively easy to get viewed by millions of people through the YouTube. YouTube paved way for careers of artists like Canadian singer Justin Bieber & Korean pop-rap artist PSY. The latter’s video “Gangnam Style” was the first ever video to receive 1 billion views. The language played no hurdle in the popularity of this song; such was the impact of YouTube.

 
collect
0
avatar
Harrris Bradley
guide
Zupyak is the world’s largest content marketing community, with over 400 000 members and 3 million articles. Explore and get your content discovered.
Read more