After YouTube’s founding in 2005 and Google’s acquisition around a year later for $1.65 billion, the video-sharing platform quickly became the undisputed king of original content and one of the most visited sites on the internet after Google itself, and Facebook. For the first time in 14 years, Google’s parent company Alphabet unveiled some of the long-awaited financials for YouTube in early February 2020 during its Fourth Quarter and Fiscal Year 2019 Results.
The report shows that YouTube’s advertising revenue grew 36% in 2019 to $15 billion, contributing almost 10% of Alphabet’s overall $162 billion annual revenue. The current growth rate of YouTube’s ad revenue is much faster than Google’s overall ad revenue, which grew by 16% in 2019. This amount generated is also impressively more than 20% of the $70 billion television advertising spending in the United States in 2019. Alphabet’s Chief Financial Officer Ruth Porat explained the reason behind the reveal in these numbers was to provide further insight into the business and the opportunities ahead.
However, other than disclosing YouTube’s ad earnings, other sources of income were not included in the report. Hence, it is still unclear how much YouTube is worth and whether or not it is profitable. Porat also stated that unlike with search advertising, the company pays out a majority of the ad revenue to its creators instead of keeping it, revealing YouTube’s non-advertising revenue of $3 billion. This is a result of 20 million subscribers to its Premium (ad-free YouTube) and Music Premium services, and 2 million subscribers to its paid TV service.