YouTube is the most popular video sharing site on the Internet today and there is hardly anyone who doesn't visit the site often to watch their favorite videos. With thousands of videos uploaded every day, the cost of running the site must be quite high! So, how does YouTube make money? If this is what you have often wondered, then read on...
The first YouTube video was uploaded on 23rd April, 2005 and featured Jawed Karim, one of the founders of the site, at the San Diego zoo and since then the site has come a long way. Before the advent of YouTube in 2005, people easily sent text through email and photographs and images as email attachments, but sharing videos on the Internet was something that no one could think of. But thanks to Steve Chen, Chad Hurley and Jawed Karim, the three former PayPal employees who were the brains behind the creation of YouTube, video sharing became fun and easy like never before. All you need to do is visit the site, search for your favorite video and then just sit back and enjoy. What's more, you can even create your own profile by registering with the site for free and once you have a profile, you can log in and upload your own videos! The videos on the site are displayed using Adobe Flash video technology, and to view them, you need to have the Adobe Flash Player plug-in installed in your browser.
Before we get on to find out how YouTube makes money, let's try to understand a little about the business dynamics of YouTube, which includes the cost of hosting and distributing so many videos. If we consider the expenses of any website, the first thing that comes to our mind is sourcing the content. Most of the content on YouTube is free as the videos are uploaded by people who are members of the site. Interestingly, around 75% of the content comes from outside the United States! However, there are other charges that include hosting charges, uploading charges, charges for transcoding and most importantly, charges for distributing. The estimated price that YouTube pays per month for bandwidth is around 30 million U.S. dollars, which is a pretty big amount!