Google - YouTube is not profitable today but will be in the not to distant future

Google attempted to put to bed the speculation from a Credit Suisse analyst that YouTube was massively unprofitable. Management essentially admitted that YouTube is unprofitable but stated that the revenue growth and monetization of videos are growing significantly and that those revenues will be profitable soon.

Here are quotes about YouTube from the two conference calls on:

"So on the first one, we don't give the economics of YouTube. What I can tell you is that we're really pleased with the trajectory of YouTube. We're really pleased both in terms of its revenue growth, which is really material to YouTube and, you know, in the not long, too long distance future, we actually see a very profitable and good business for us. So from that perspective, we're really pleased with the trajectory. On the second one, I'll let Eric answer."

"On YouTube, monetized views have more than tripled in the past year. We're now monetizing billions of views of partner videos every month and we're actively promoting featured partner videos on all the home -- on the home, watch and search pages. "


"We do look carefully at the drop-off rate with the preroll and there's very little drop-off, so we're generally pretty optimistic there. The pre-rolls have -- if you look on the web, if you look at premium content, users are accepting that when they are going to watch premium content, they are going to have to see it's supported either by some form of advertising funding or perhaps they are going to have to pay for it at some point in time. It is becoming accepted user behavior that if they are going -- creating it, they are going to watch pre-roll. There seems to be a general acceptance around this area."

"I think, Jonathan, just to add to what you said, yes, we are beginning to see that YouTube has established in the advertiser space now that the YouTube home page is of relevance and is desirable for customers. So we are seeing significant sell-through in most of our major markets where we have YouTube home page for sale. In addition, we are beginning to see lots of interest in -- advertising, which is what customers want on the short clips that we are beginning to acquire from our major partners like Disney and the deal we did recently with -- I think the next phase of YouTube is going to be towards -- long-form video, which are in the process of doing various deals which you have announced in the past. "

"Yeah, YouTube trajectory has effective been about an ability to scale. We've introduced ad formats. We've gotten into the selling process, selling cycle of agencies and advertisers and we've been able to go out and sort of create our sales force to go and make these sell-throughs happen. The reason we're excited about it is we finally got all the pieces in place. The agencies getting into the selling process and the buying process and getting our teams ready. Secondly on YouTube, we're also getting excited about the -- beginning to bring more content. The promoted videos idea, where we can promote partner content up front so we can shift more and more user views towards more premium content allows us to create more inventory, couple that with the fact our teams are now out there selling advertising -- various advertisers that creates the scale and the breadth that we need to drive this forward."

"I think that the, it is true that we are pleased with YouTubes trajectory. And in part the reason why we are communicating to the street is there has been so much press over the last quarter with all of these documentations of massive costs and no business models and all of the negative press that we have read a lot about. And we just wanted to kind of reafirm to the street this was, this is a very credible business model and one that has got trajectory. In that sense it is just to tell everybody we are on progress on the plan we had made for it. I will turn to Jonathan on the monetization pieces. Sure, ben. They watch videos and engage with the community with comment recommendations and that sort of thing. The different types of modes really get different advertising models and that's part of why I think it has taken us time to trian late toward what works and I think some of the thing that is we have now are still in pretty basic stages. If you look at the home page, it is basically big brand display ads. Search can with good for promoting videos. Maybe what app does for google. If you look at where the big inventory is, the massive users are in more the watch pages. So that is where we are sort of trying to figure out is it overlays that are going to work, in-stream stuff, I think we are still asking all of these thing that is the answer is going to be different for the different areas on the site that the user is on. "