How does YouTube Earn??

YouTube history 

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.Thanks to Steve Chen, Chad Hurley and Jawed Karim, the three former PayPal employees who were the brains behind the creation of YouTube.

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 However, there are other charges that include hosting charges, uploading charges, charges for transcoding and most importantly, charges for distributing. 

How does YouTube Earn Money?

In November 2006, Google Inc. bought YouTube for a whopping $1.65 billion and now the site functions as a subsidiary of the Internet giant. The fact that Google Inc. showed interest in acquiring YouTube means that YouTube was indeed a money spinning venture that made huge profits. So, where does all this money come from and what makes YouTube such a successful business venture financially? Read on to know.

Revenue from Advertisements

This is, by far, the biggest source of revenue for any site and YouTube is no exception. If you type something in the search box and click enter, you are directed to a page that displays the search results that match the words you had typed in. If you look at the right side of this page, you'll find several links of websites featured under a section named 'Google Ads'. These are nothing but Google AdSense advertisements and every time someone clicks on these links, YouTube earns revenue.

Another way to earn money through advertisements is to place ad clips before or after a video. This is termed as premium advertising and is rare in YouTube. Even though millions of videos are viewed by people who visit the site, you can see that hardly any of the videos have ads in them. Only 3-4% of the total videos on the site have ads in them while the rest do not.

Revenue From Sponsored Partnerships

Another major source of revenue for YouTube are sponsored partnerships with media firms such as  VijayTV and Sun TV, whereby these firms can post full-length films and episodes from television series, on the site. This began in 2008. At present, viewers in the U.S. can rent full-length movies from YouTube, and the site is planning to soon launch this worldwide. Recently, in March 2010, the Indian Premier League matches were broadcasted live worldwide on YouTube. This was the first time a major sporting event was featured live online.

Revenue From Bidding Keywords

If you know the basics of search engine optimization, you must be aware of what keywords are. They are words or a group of words that most people search for. Now, if you begin typing something in Google's search box, you'd see that there are a few suggestions that appear. In the same way, you find suggestions appearing below the search box in YouTube as well. The phrases that appear are termed as keywords. For this, all you need to do is bid for keywords. The more the number of people who bid for their video titles (or a part of it) to appear in the list of suggested keywords, the more the revenue earned by YouTube!
                                        
                           

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