YouTube now claims a billion monthly users; that’s half of the people on the internet. But a billion users don't necessarily add up to a profitable business.
"The question about how much money they make or how much money they lose is still an open question," says Brian Wieser, an analyst at Pivotal Research. As for the billion user mark, when it comes to making money, Wieser says, “it’s not terribly meaningful.”
It’s a recurring theme in these tech stories: internet-users-do-not-equal-profit.
"In the press release yesterday they said, if YouTube were a country, we’d be the 3rd largest in the country behind China or India. And I’d argue or ask the question, if YouTube were a stand-alone business, would it be bankrupt?" asks Bernard Gershon, president of Gershon Media.
For one, most YouTube videos don’t have ads. Most advertisers don’t want to go near singing squirrels. "I think that premium advertisers and Fortune 500 brands want to be associated with high quality video," Gershon says.
Gershon expects YouTube will keep adding eyeballs. But, to make money, he says, it’s going to need add more widely appealing content.
And it’s considering a subscription service, where we’ll have to pay to watch the really good stuff.