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Originally Posted by jammies
Google's is, just not the Youtube part of it - should have made that clear. I can't really find any reliable estimates of its revenue from Youtube, though. Maybe they are making craptons of money, despite infrastructure costs that you would think would be much higher, and effectiveness on getting clicks, which you think would be lower.
Look at it this way. I watch a 3-5 minute Youtube video, I see one ad popup in the window. Do people spend an average of 3-5 minutes on each web page they view? Does the average web page have just one ad? It's simply not even remotely as efficient at delivering click-throughs.
I assume they must be charging big money to advertisers who have the 15-30 second clips that sometimes run at the start of videos. But unlike television, where (until recently), you more or less had to watch the ads, you aren't forced to watch those clips. Even if you are too lazy or technically inept to install browser add-ons to get by them, you can still click past them. And if you start forcing people to watch them, again, how do you stop people from eventually migrating to another source for their videos that doesn't make them do so?
Maybe they are about to launch their own subscription service for premium content. That they are going to do so doesn't make me think that Youtube is making money, though, it makes me think they are realizing that ad revenue is not magic that turns every single "free" product into a profitable one.
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You're still thinking way, way too small. How much money they make off direct ad placement for a service like YouTube is probably almost 100% irrelevant to their bigger aim, which is to learn _everything_ about you and your demographic, so that they can properly monetize advertising to you across the Google network and network of partners/customers. Knowing what media you consume, about what topics, when, where, for how long, how often, who else you know, on what platforms, and most importantly, long term trends in viewing habits, is of extreme value to their aims.
Thinking about advertising revenue as being tied to number of views and clicks is old-school, and too small for Google - they raise revenue by raising the premium they charge for the ability of companies to advertise directly to the perfect customer. They've stated on more than one occasion that they intend to get to a point where they can anticipate needs before you perceive them.
A lot of what Google does, including YouTube, is less about getting the volume of ads up and raising revenue that way, and more about getting the value of you as a consumer data point up for sale to their advertising clients. YouTube is almost more of a honey-pot for consumer behavioral data, rather than a vehicle for raw, volume based advertising. Same with GMail, G+, Google Maps, Google Now, etc.
Put bluntly - Google doesn't need to show you an ad on YouTube when they know, with a high degree of computational certainty where you are headed after YouTube, where you'll be tonight, what inbox items you read in your email tomorrow morning, what you're likely to eat for lunch (and where) on Saturday, etc. They'll get their marketing in, don't you worry.
Read this article, then contemplate YouTube in the context of what Target accomplished, but at Internet scale and with the breadth and reach of Google.
http://www.forbes.com/sites/kashmirh...er-father-did/
They say the eyes are the windows to the soul, and Google knows what your eyes are peering at thanks to YouTube. It's a highly strategic asset to them, irregardless of how much profit it actually generates.