1
$\begingroup$

Google makes so much money from tracking almost everyone who uses the internet everywhere and displaying personalized ads across the web; so they don't need more money from YouTube video ads; so why make the experience and reputation of YouTube worse?

I also wonder if this could put YouTube at the risk of being replaced by a new platform easily.

$\endgroup$
12
  • 1
    $\begingroup$ @AZeed Gmail has also adds, also if that would be true that means they get all of their money from YouTube adds $\endgroup$
    – 1muflon1
    Jul 22, 2022 at 12:13
  • 1
    $\begingroup$ www.google.com has adds. $\endgroup$
    – Giskard
    Jul 22, 2022 at 12:13
  • 2
    $\begingroup$ The google com adds definitely make the experience worse, you have to sift through promoted hits before you find what you are looking for. $\endgroup$
    – Giskard
    Jul 22, 2022 at 12:16
  • 2
    $\begingroup$ Anyway, can you please quantify your statements, support your claims with references and clarify the question a bit? I still don't understand why they would keep Youtube if it is only going to lose them money. $\endgroup$
    – Giskard
    Jul 22, 2022 at 12:17
  • 1
    $\begingroup$ @Giskard oh sorry for my bad grammar $\endgroup$
    – 1muflon1
    Jul 22, 2022 at 12:34

1 Answer 1

1
$\begingroup$

Why does YouTube want to make money from video ads?

YouTube is a business. A primarily objective of a business is to maximize profit. No serious business will manage its affairs with intent of just to break even or to voluntarily forgo profit.

In fact since YouTube LLC is owned by Alphabet Inc and Alphabet is public corporation, the CEO of Alphabet is legally obliged to fulfill its fiduciary obligations to shareholders. A CEO could potentially even be sued for not trying to maximize long run profitability of the company.

I also wonder if this could put YouTube at the risk of being replaced by a new platform easily.

Any successful business has to be profitable in a long-run. Business that bleeds money is not sustainable. Hence any YouTube competitor will have to monetize their content somehow.

This does not need to be via ads. There are streaming services such as Netflix, Disney+, HBO MAX or others that do not run ads but offer subscription models. In fact YouTube also offers ad-free version YouTube Plus for monthly subscription fee. In future there might be some different monetization alternatives than ads and pay subscription but I can't think of any alternative.

Consequently, no matter what customers will have to pay for the content in one way or another. Hence, I do not think the YouTube business model of playing ads puts them at a serious disadvantage, especially given that YouTube offers both paid ad-free subscription model and ad model so people who don't like ads can just self-select for YouTube Premium instead of looking for alternative platform.

$\endgroup$
4
  • $\begingroup$ But isn't Alphabet making enough money from Google to fulfill YouTube's fiduciary obligations? $\endgroup$
    – AZeed
    Jul 22, 2022 at 14:07
  • 1
    $\begingroup$ @AZeed their obligation is to maximize long-run profit not just earn profit. In addition, forget about maximizing profit they have even stronger obligation not to damage a business. Producing product at a loss without justifying it as some profit maximizing strategy in a long run (eg driving competitors out of business) would literally destroy shareholder value and Alphabet would be better of just ceasing to operate YouTube. It does not matter that the business as a whole is profitable, if there is a product that destroys value and there are no deferred benefits the rational thing is to end it $\endgroup$
    – 1muflon1
    Jul 22, 2022 at 14:20
  • 1
    $\begingroup$ @1muflon1 Does Alphabet has a fiduciary responsibility to maximize the company's long-term profitability or does it have to do so for each business unit separately, perhaps eliminating positve externalities? E.g., it could be detrimental to a company if its accounting/IT deparment would have to maximize their profitability by charching other unites competitive rates for their services. $\endgroup$
    – Giskard
    Jul 23, 2022 at 6:09
  • 1
    $\begingroup$ @Giskard they don’t need to do it for each unit separately but that’s what I mentioned above if there is no deferred benefit from cross subsidizing the business it makes no sense to do it, if there would be any benefit for the business doing so then it would make sense $\endgroup$
    – 1muflon1
    Jul 23, 2022 at 9:59

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.