YouTube has progressed from a small-scale business venture to an established company achieving global breakthroughs. It currently ranks as the second most popular social media platform, allowing users to watch and upload videos on desktop and mobile devices.
YouTube continues to thrive as a source of business and entertainment for creators, users, and advertisers. How did this leading video-sharing platform get its start? What was its value then, and what is it now? Let’s find out who owns YouTube.
Did you know that YouTube was initially conceptualized as a video dating site? However, it became a home video-sharing platform, attracting over 30,000 site visits per day during its limited beta testing in May 2005. It was launched to the public in December of the same year, where it quickly grew to reach over eight million video views per day.
YouTube was created in 2004 by three former PayPal employees, Steve Chen, Chad Hurley, and Jawed Karim. The idea originated in Chad Hurley’s garage in Menlo Park, California.
On Valentine’s day in 2005, Chad Hurley officially registered the trademark, logo, and domain for YouTube as a dating site. But the concept didn’t pan out, so the trio came up with the idea of allowing users to upload all kinds of videos. Jawed Karim shared that the idea came from searching for clips of two memorable events in 2004: Janet Jackson’s wardrobe malfunction at the Super Bowl and the Indian Ocean earthquake and tsunami.
The first-ever YouTube video, “Me at the Zoo,” was uploaded in the early days before the platform was public. The 18-second clip showed Karim and the team at the San Diego Zoo standing before the elephants, describing their trunks.
This coincided with YouTube partnering with firms like Sequoia Capital Firm, with an investment of $3.5 million. Roelof Botha, former Chief Financial Officer of PayPal, also joined YouTube’s board of directors.
YouTube was successful and growing rapidly, but it also had to allocate resources for equipment, broadband connections, and even potential litigation due to copyright issues from the majority of its uploaded videos. To manage the growing costs and risks, YouTube went in search of a buyer.
In November 2006, Google bought YouTube for US$1.65 billion. Google had also produced Google Video, but it didn’t take off how they wanted it to. Because of the platform’s growth, Google saw YouTube as an excellent opportunity to make it their official video uploading site.
The two companies agreed that YouTube would retain its separate brand and work independently from its headquarters in San Bruno. Despite being owned by Google, YouTube retained all of its employees.
Some factors to consider when identifying how much YouTube is worth include:
YouTube earned an estimated US$35 billion in annual revenue until the first half of 2022, with most of its earnings coming from Ad Sales (85%). The remaining 15% of YouTube’s revenue is generated from user subscriptions on YouTube Premium.
YouTube is an excellent platform for content creators to earn money from their videos. Ad Sales place targeted ads on video content, and content creators get 45% of the revenue from those ads. Content creators like gamers, make-up experts, travel vloggers, and bloggers also get creative with their video thumbnails to secure exposure and ad placements.
In 2021, YouTube content creators were paid over US$15.9 billion, a continuous increase in their net worth. The top 10 highest paid YouTube stars generated $300 million in annual earnings. Mr. Beast landed the top spot, earning roughly $27 million and over 100 million current subscribers.
Meanwhile, YouTube Premium has over 50 million subscribers, offering an ad-free video experience for US$12 per month.
While social media apps like TikTok are emerging in the digital space, Alphabet (Google Search, Display, and YouTube) continue to dominate digital ad spending with 58%, next to Meta (Facebook and Instagram with 76% excluding China).
YouTube has a projected increase in global digital ad spending from US $466 billion in 2022 to US $686 billion in 2026, with a steady overall media spend of 62 to 65%.
With over 2 billion monthly active users, YouTube ranks as the world’s second most prominent social media platform. It delivers value to creators, users, and advertisers.
YouTube’s estimated gross profit margin is lower than its competitor Meta (Facebook and Instagram), with 38% compared to 80% for Meta. One main factor to consider is YouTube’s revenue model scheme, under which creators make money on the platform.
YouTube expects to increase its ad spending to 7-8% in the next few years, while user growth is projected to reach 2.8 billion monthly active users.
YouTube Premium subscribers are also expected to grow from 50 to 175 million active users in the same period.
This would value YouTube at US$183 billion, a significant increase from its US$1.6 billion worth when Google paid for YouTube in 2006.
Meanwhile, Alphabet, YouTube’s parent company, is projected at an average valuation of $1.4 trillion, with YouTube representing 15% of Alphabet’s trading valuation.
YouTube has had a significant impact on social media and pop culture. It has evolved from a website to a mobile app and integrated with other platforms and network television. YouTube has developed features like Shorts, ad-free video subscriptions, and full-length videos.
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