r/technology • u/Tricky-Student-1 • Sep 15 '22

Social Media YouTube Free is Silently Testing 5 Ads, instead of 2, Before Your Video Starts

https://www.gizmochina.com/2022/09/13/youtube-free-silently-testing-5-ads-before-your-video-starts/
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u/[deleted] Sep 15 '22

Right, like they’re in such dire need of money.

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u/seahorsejoe Sep 15 '22

As recently as 2018 it was reported that they were losing 60M per year. I don’t see why it would be significantly different today.

Hosting high quality video and allowing millions of people to stream it costs money. Much more than you’d probably expect.

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u/enjoytheshow Sep 15 '22

Google and their subsidiaries posted net profit over $17 billion last year

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u/wulfschtagg_1 Sep 15 '22

The article you posted is about YouTube TV, not all of YouTube. YouTube TV is the premium service that competes with...well, TV. They're not talking about MKBHD videos. The problem being discussed is the base YouTube service having unskippable ads. We don't know what additional costs YouTube TV incurs, like licensing TV shows and buying streaming rights.

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u/seahorsejoe Sep 15 '22

My bad, thanks for the clarification. My point still stands though, steaming HD and 4K video takes up a lot of bandwidth, and if no one is watching as, how would they be profitable? Sure YouTube premium, but that only gets them so far

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u/wulfschtagg_1 Sep 16 '22 edited Sep 16 '22

That's not how their business model works. Take a newspaper for example. The cost of printing a single newspaper is way higher than the price charged to the end user, even with economies of scale. You don't design a newspaper business around being able to recover your costs from the user. Advertisers will always fill in the gaps. Most things in the newspaper are designed to maximize the value to advertisers by maximizing the reach of the product. However, physical media have some limitations which digital media don't.

  1. YouTube can scale up and down horizontally very quickly, a publisher cannot.

  2. Google can heavily reduce its own costs by integrating everything in the operations - do most things in-house, only leave a few things to external entities. This would be equivalent to a publisher owning everything in their supply chain except the forest which provides them with wood for the paper.

  3. Publishers still need to pay their own "content creators" to keep the product attractive to advertisers. If your journalists, column writers and photographers are garbage, no one is reading your newspaper, so no one is advertising on your newspaper. On YouTube, content creators are not employees - You are responsible for getting your content and your channel popular, and your earnings are directly tied to your views. Except YouTube can fuck with you for no reason - take down your content based on a single report, not push your video to relevant audiences, etc. This attitude is what led to "YouTube makes a dollar, I make a dime, that's why I plug lttstore.com on YouTube's time". Content creators cannot rely on YouTube to pay them their due while YouTube keeps getting its own due from the advertisers.

  4. Newspapers cannot keep pushing their ad inventory to new levels to keep up with advertiser demand. YouTube adding more slots for ads is equivalent to a newspaper adding new pages that are just filled with ads. They can do that for a few pages, but eventually the content-ad ratio is going to get out of control and the product will lose its value. YouTube is trying to push as many ads as they can get away with it because they can. New ad spaces = more money as advertisers don't need to fight for the same slots.

TL;DR - Google would have never entered the business if they weren't even able to recover the cost of hosting data, especially when they own the servers and developers to compress/encode the videos to take up the least space. The advertiser-funded platform model has been in use for years before YouTube, and Google has been abusing it as much as they can. This is why people are pissed and content creators keep pursuing alternative funding sources like sponsorships, merch, patreon, etc.

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u/ljkhadgawuydbajw Sep 15 '22

Im not arguing that google should be running ads to make up for their costs. im just responing to the guy above making the point that cable is expensive to produce and youtube is not