A Quick And Simple-Minded Attempt To Follow Some Of The Google/YouTube Money

May 2, 2012 · Posted in business, Discussion 

An interesting piece from Digital Music News this morning…

It may not be the cleanest experience, but it is the biggest experience – by a gigantic and overpowering margin. In fact, nearly 40 percent of YouTube’s trillion-plus annual views come from music videos according to the latest research estimates. And according to our calculations, that makes YouTube Music bigger than Spotify, Rhapsody, Grooveshark (and Rdio, MOG, Deezer, and eMusic) combined.

So, YouTube gets their revenue from ads. They are able to sell ads because of the enormous amount of traffic (“trillion-plus annual views”) they get.

YouTube, of course, is owned by Google, the world’s biggest ad agency. So, for practical purpses this discussion is about Google.

I’ve been curious about how Google really makes their money and how much. But, it’s a tough trail to follow.

I can provide a little of my own insight because, I do recieve a bit of revenue from Google for using them as an ad provider and I have also, recently become an advertiser.

I have ads, provided by Google on this website and I also have some YouTube videos up which are part of the revenue sharing partner program.

I also have a guitar lesson site (Jack’s Guitar Lessons) that I have been promoting with Google AdWords.

In an effort to follow the money here are my calculations as of this morning…

Here’s what I pay Google, the average cost per click is…$0.74

Here’s what Google has been paying me per click…$0.21

So…just from my numbers it appears that when an ad is sold roughly 72% of the money goes to Google.

I have no way of knowing how representative these figures are.

However, looking at the example that 40% of YouTube traffic comes from music, it brings home the fact that Google doesn’t absorb the cost of providing the content that drives all of the traffic that provides the revenue. Sure, Google has it’s overhead but, if they get anywhere near 72% of that revenue, one has to wonder how much of Google’s overhead is “administrative” costs.

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Comments

3 Responses to “A Quick And Simple-Minded Attempt To Follow Some Of The Google/YouTube Money”

  1. Pat Darnell and Friends on May 4th, 2012 2:34 am

    I posted Google Ads in a moment of madness to “see” what all that is about… this was about three years ago… Google tells me they are holding about $14.03 in escrow for me, pending my submitting a tax form…. Hahahahahahaha!!!

    Anyone else have that experience? Google is run like the U.S. Gumbmint, you either lose money or break even; and breaking even is the top prize for money pits like them.

    But I am still a Google Man and an Astros’ fan.

  2. Pribek on May 4th, 2012 2:54 pm

    I found a picture of young PD…

    http://www.sportslogos.net/blog/wp-content/uploads/2012/03/colt-45s-201202.jpg

  3. Pat Darnell and Friends on May 5th, 2012 3:43 pm

    I am behooved.

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