YouTube is a big revenue generator, but isn t pulling in much, if any, profit, according to a report from the Wall Street Journal. The online video firm, owned by Mountain View-based Google, pulled in about $4 billion in revenue during 2014, which comes out to a 33 percent jump in revenue compared to 2013, some insiders familiar with the YouTube financials told the Journal. The sources also said that YouTube is roughly in a break-even mode. A lot of the expenditures for YouTube were linked to paying for content as well as equipment to deliver the videos on the Web. YouTube accounted for about 6 percent of Google s $66 billion in revenue during 2014. With 1 billion viewers for YouTube, that level of profit contrasts sharply with Menlo Park-based Facebook, which generated $12.45 billion in revenue and $2.93 billion in profits with 1.3 billion users during 2014. The way YouTube is distributed is not always conducive to ad revenue, said Tim Bajarin, principal analyst with Campbell-based Creative Strategies, which tracks the the technology sector. The YouTube ads are on the side, but they are not embedded in the programming, like you see in television. The current YouTube format might be good for consumers, but that doesn t mean it s all that great for the bottom line, Bajarin said. They are going to have to change things up, Bajarin said. Or put another way, YouTube is going to have to become more like true television, in which people go TV to find the channels they seek. YouTube could do something like Amazon or Netflix, and create its own original content, Bajarin said. Facebook and Twitter could pose new challenges to YouTube, because those social networks are creating their own video services. If YouTube wants to move towards strong profitability, or to be profitable, they are gong to have to take that advertising and make it part of any actual programming, Bajarin said. And one way to have control over all that is to create their own content.
