When Google bought YouTube for $1.65bn in 2006, there were plenty of doubters. That price is looking pretty good now, though: Citi analyst Mark Mahaney has predicted that YouTube’s 2012 revenues will top $3.6bn.
A figure which in his words, is “likely 50% greater than Yahoo!’s Display Advertising total and right-in-line with Netflix’s total subscription revenue. We really doubt whether most investors realize how big/important YouTube has become.”
Under Google’s wing, YouTube’s commercial strategy is coming good, as the company adds more advertising, and tries to shift perceptions of YouTube from a site of individual videos towards being a site of TV-style channels, delivered across every platform and device. Mahaney thinks that after distributing money to partners, Google’s net revenues from YouTube wil be $2.4bn this year.
Big numbers, but could they reignite an old debate within the music industry about YouTube payouts to artists, songwriters and rightsholders? It’s no secret that the larger streaming music services are frustrated that YouTube never seems to figure in public debates about their own payout rates – although they often forget the days in early 2009 when PRS for Music was campaigning against YouTube. Or, for that matter, GEMA in 2012.
If YouTube does do $3.6bn of revenues this year – Mahaney is a respected analyst covering the company, but it’s still just a prediction – perhaps it will serve as inspiration for the streaming services though. A commercial model that was initially scoffed at has proved its worth at scale. For YouTube in 2012, read Spotify in 2016? Or sooner, given CEO Daniel Ek’s prediction in April that his company’s revenues could reach nearly $900m this year.