Peter Kafka

Recent Posts by Peter Kafka

The Numbers Behind the World’s Fastest-Growing Web Site: YouTube’s Finances Revealed

There’s no smoking gun in the YouTube-Viacom papers, but there is some great stuff. Like these documents, which offer an unprecedented look at the finances behind the world’s most successful video site.

I’m not exactly sure why Viacom dug up YouTube’s profit-and-loss statement and balance sheet from its pre-Google days, but I’m glad it did. You can see the entire thing, which covers YouTube’s birth in the spring of 2005 through August 2006, at the bottom of this post.

But these excerpts give you a very good snapshot of what was going on in the company’s early days–hypergrowth, followed, eventually, by revenue (click to enlarge):


Some context: Chad Hurley registered the YouTube domain in February 2005, but the site wasn’t up and running for a few more months. Co-founder Jared Karim uploaded YouTube’s first video, “Me at the zoo,” in late April 2005.

By December 2005, users were uploading 6,000 clips a day, and the site was streaming 2.5 million videos a day. By February 2006, those numbers had jumped to 20,000 and 18 million, respectively. In July 2006, YouTube users uploaded 2.1 million clips and watched three billion of them.

Which explains the skyrocketing Web-hosting bills. But do note the burst of revenue from direct sales in August 2006, which allowed the company to generate a gross profit. A lot of people assumed that YouTube had to find a buyer like Google (GOOG) a few months later because it couldn’t pay its own bandwidth bills. But these numbers suggest that this may not be the case.

Also of note for Web video and Web ad nerds/historians: Check out the detailed breakdown of YouTube’s ad revenue and hosting costs, both real and projected, circa December 2005.


youtube pl


balance sheet


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work