By Sean Mowry (scmowry)

Youtube LLC
901 Cherry Ave
San Bruno, CA
94066
(650) 253-0000

Key Executives [2]

Larry Page CEO and Co-Founder

Eric E. Schmidt Executive Chairman

Susan Wojcicki Senior Vice President, YouTube

History

In 2005 three PayPal employees, Chad Hurley, Steve Chen, and Jawed Karim, started up YouTube as a video-sharing site. By the end of the first year, the site had 200,000 registered users and showed more than 2 million videos a day [3]. In 2006, Google bought YouTube for 1.65 billion dollars despite copyright concerns from media corporations at the time. Google then decided to reach out and partner with the Universal Music Group, CBS Corp., Sony, and BMG Music Entertainment [4]. Now, more than 1 billion unique users visit YouTube each month and over 6 billion hours of video are watched every month on YouTube. Each minute, 100 hours of content is uploaded to YouTube and according to Nielsen, YouTube reaches more US adults ages 18-34 than any cable network. The website is a global powerhouse, with 80% of YouTube traffic coming from outside the US [5].

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Finances

Google Inc. reported consolidated revenues of $16.52 billion for the third quarter, ending September 30, which is an increase of 20% compared with the third quarter report from 2013. $9.55 billion, or 58% of this revenue is from outside the United States. Net income for the third quarter is $2.81 billion, which is down from $2.97 billion in 2013. This is also lower than the second quarter net income of $3.42 billion [6]. As of 11/30/2014, Google’s stock is $541.83 [7].

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Subscriptions

YouTube is continuing to roll out two new subscription services this year. The first is a wave of paid subscription channels, like those offered for free now, but without advertising. This was launched in 2013 but the website is aggressively expanding the number of channels this year. They now offer 238 channels, like NorthwoodsLeague, which is a summer baseball league comprised of top North American College players [8]. With more video online, and most of that online video is coming from YouTube, the website predicts that there will be a sizable share of the audience who would rather pay to watch the content than sit through advertising. The project is a means of offering more options, and it also follows the subscription models of Netflix or Hulu, but at a more specific scale so that the site can operate effectively the same as before the rollout [9][10].

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The second subscription service launched this year is that of Music Key, which is a program that allows users to watch music videos without ads while also giving them the option to download the content onto their devices for offline listening and viewing. The mobile devices will also be able to continue playing music in the background when they switch to other programs. In addition to album tracks, Music Key offers downloads of concert recordings, remixes, unreleased rarities and cover versions recorded by others. While YouTube hails itself as “the biggest music service on the planet” it is desperately lagging behind Spotify’s 12.5 million paying subscribers [11].

In July of 2014, Google also acquired Songza, a music streaming service that specializes in offering playlists made by people that are advertised for listening at any given time or during any given mood that you want. Songza is still running as a separate service, but Google and YouTube are looking to apply the company’s expertise to their products like Google Play or Music Key [12].

In other news, YouTube now allows users to upload video in 60 frames per second, where before they were capped at 30 frames per second [13].

East Coast Presence

YouTube is a west coast, online company, but now it has recently opened up YouTube Space New York, a studio in Manhattan that is available to any channel that has more than 5,000 subscribers and is part of the Partner Program in which ads are hosted and revenue is shared. The studios are a way of giving content creators more means of making an effective product and expanding their audience while also giving the company a footing in the diverse media landscape of New York City. Since the studios opened in other cities like London, Los Angeles, and Tokyo two years ago, more than 30,00 people have attended 450 workshops and created 6,000 videos that were seen for 47 million hours [14][15].

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Another bonus to this is that it brings the company within proximity of Madison Ave, and they have been touring the studios with advertising executives to offer them an opportunity to collaborate with creators. So a company like Maybelline could use BrandLab to host a day in which creators who focus in beauty could collaborate with them. Many of these channels offer audiences numbers that would leave traditional players envious, but advertisers continue to put a low cost on these audiences. The company hopes to change that mentality [14].

Competition From Facebook

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In early November 2014, a John Lewis Christmas Ad stormed social media. The video was shared 200,000 times within the first 24 hours, and most of this was on Facebook. While that might be good for the department store, Facebook stole 40% of the online audience for the video, which would have previously belonged exclusively to YouTube. Facebook is now placing video at the heart of the company’s growth announcing this September that the platform achieved more than 1 billion views a day. Facebook is rolling out video advertising slowly, so that users can get used to the idea of having ads on their news feeds [17].

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Facebook is also trying to lure content creators to the site by sharing their ad revenue in a more lucrative ratio. While they would be developing features that are reminiscent of YouTube, they have the News Feed, which is the key to their success and something that YouTube will have to anticipate combating in the near future. Often times Youtube channels will use Facebook to promote their videos but if they were to switch to the social media platform all together, a lot of ad revenue could be lost for YouTube, considering that they have been on top for so long, that they are struggling with loosing their audience and their bait for advertisers [16].