- Samantha Lee/Business Insider
- Alphabet, Google’s parent company, broke out YouTube’s advertising revenue for the first time ever on Monday, and revealed the video-sharing site brought in $15 billion in 2019.
- YouTube’s ad revenue is around nine times more than the $1.65 billion Google spent to acquire the platform in October 2006.
- At the time, YouTube was only 1.5 years old and had only 65 employees. Google’s CEO at the time called YouTube “the next step in the evolution of the Internet.”
- However, Alphabet also said that “most” of YouTube’s advertising revenue goes back to creators on the platform, making it hard to estimate how much of that cash flows back to the company as profit.
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YouTube has revealed its advertising revenue surpassed $15 billion in 2019 – which is nine times more than Google paid for the video-sharing website 14 years ago.
Alphabet, Google’s parent company, broke out the long-awaited revenue numbers for YouTube for the first time ever on Monday in its earnings report on the 2019 fiscal year. Ads on the video site now comprise about 9% of Alphabet’s overall revenue, which totaled $162 billion last year.
The breakout for YouTube’s numbers marks the end of a long period of silence: It’s the first time Google has reported these figures since the YouTube acquisition closed in 2006. Alphabet similarly reported Google Cloud revenues for the first time, which came out to about $2.6 billion in the quarter.
Alphabet CFO Ruth Porat said in a press release around the earnings report that the reason for the sudden disclosure is to “to provide further insight into our business and the opportunities ahead.” The disclosures also came as Alphabet’s overall quarterly revenue fell short of Wall Street expectations.
Those revenue figures don’t tell the entire story, however – Porat said on a post-earnings conference call with Wall Street analysts that “most” of that revenue goes to YouTube’s roster of creators, making it hard to estimate how much of it flows back to the company as profit. Regardless, however, the figure highlights the exponential growth of the video platform in just 15 years of existence.
YouTube has grown to become one of the most popular sites for creating and sharing videos on the internet. YouTube now has more than 2 billion monthly users visiting the video-sharing platform. They watch over 250 million hours each day of their favorite vlogs, music videos, sports highlights, and more.
Google bought YouTube in October 2006 when the platform had only 65 employees. At the time, YouTube was still in its infancy: three early employees at PayPal had launched it a year-and-half earlier out of an office above a California pizzeria.
The acquisition of YouTube was spearheaded by early Google employee Susan Wojcicki – now the CEO of YouTube. Wojcicki has credited a video of two boys lip-syncing to the Backstreet Boys with convincing her that it would be worth it for Google to invest in user-generated content by purchasing YouTube.
Wojcicki successfully pleaded the potential of YouTube to Google’s cofounders, Larry Page and Sergey Brin, who then offered $1.65 billion to buy the site. Eric Schmidt, the CEO of Google at the time, called YouTube “the next step in the evolution of the Internet.”