Media

Analysts: YouTube will finally reach the promised land of profitability

NOTE: GrowthBeat is less than 2 weeks out! VentureBeat is gathering the best and brightest in modern digital marketing to help declutter the landscape, simplify the functions, clarify the goals, and point the way to success. Get the full scoop here, and buy your tickets while they last.

YouTube remains one of the big question marks in Google’s finances. Every time the Google-owned video supersite comes up, executives make vague statements about how it’s not profitable yet, but could be soon. But it looks like that could change in 2010. Analysts predict YouTube will earn $450 million and finally turn a profit this year, according to The New York Times.

Of course, those are outside estimates, so take them with a grain of salt. When reporting its earnings, Google doesn’t offer any specifics about YouTube. But given the constant chatter about how the site is a money-loser, we’re guessing Google will probably announce when the site is profitable. Google did reveal that revenue has doubled for the last three years and that there are “hundreds” of YouTube content partners making more than $100,000 per year.

Ads are served on more than 2 billion video views on YouTube every week, Google told The Times. One-third of those videos were uploaded without the content owner’s permission. Those content owners have chosen to make money from the ads served on those videos, rather than taking the videos down.

And it’s the word-perfect definition of an everybody-wins situation: The uploader gets to keep the video online, the content owner gets a chunk of the ad revenue, YouTube is saved from the hassle of having to delete its content and also profits from the revenue split. Oh, and viewers get to see more content than they would otherwise.

Chris Maxcy, YouTube’s director of content partnerships, describes a time when a meeting with YouTube executives and partners was filled with 90 percent lawyers and barely anyone in the marketing department. “Now, the partners we are working with get checks that get bigger every month. And now when you walk into a meeting there’s almost no lawyers, or there’s a couple of lawyers but they are deal lawyers there to help you get your contract done,” Maxcy said.

This is also a timely answer to critics who panned Google’s decision to buy the company for $1.65 billion four years ago, writing it off as a property that would never be able to see a profit despite drawing so many eyeballs.