Google Loses up to $1.65 Million Per Day on YouTube

I’d be hard-pressed to believe that not every single person who visits our site has also visited YouTube at least once in the past month. In fact, I’d believe that the vast majority have visited in the past week. YouTube has become one with the Internet, and even if you don’t go there by your own volition, you probably have friends who help you wind up there anyway.

So with that in mind, is it any surprise that Google actually loses upwards of $1.65 million per day on the service? Believe it or not, it looks to be the truth, and sure, “it’s Google”, but that’s still a staggering amount of money. So the question must be asked. When Google purchased the video sharing site in 2006, is this how they pictured things would be in 2009?

I’m doubtful. Apparently, they’ve yet to figure out a way to generate real revenue, and like other web services, such as Facebook, it seems like you need to first lose a lot of money to make any of it back. The uncertainty is the future of these services, and how they’ll change. Google’s not going to continue essentially giving away millions of dollars each day simply to benefit the viewers, but I also can’t guess what could be done otherwise. Paid subscriptions are one idea, but that’s another avenue of revenue that’s difficult to master. It will be interesting to see even the next year how things will play out for the monolithic web service.

The average visitor to YouTube costs Google more than a dollar ($513 million to $663 million in estimated losses divided by 375 million unique visitors). In effect, Google is paying you to enjoy YouTube videos. In return, it gets the chance to show you some advertising. But adoption of those big-ticket items (YouTube sells homepage roadblock ads at $175,000 per day and branded channels at $200,000 apiece) has been limited, and Google AdWords image advertising remains the primary revenue source for YouTube.