Universal sees YouTube profit grow substantially

By Justin Mann on December 18, 2008, 4:25 PM
Google's YouTube investment may end up paying off after all, it seems, with some recent information revealing the cash flow it is capable of generating. Universal Music Group signed a licensing deal with Google a while back, and since then has seen a gradual increase in cash generated from the site. It's doing well enough that current estimates claim it has risen nearly 80% in terms of profitability, and may be on track to help UMG break over $100 million in cash this year alone, from video streaming. That revenue is generated from multiple sources that stream video, including MySpace, but UMG has stated that the majority share of it comes from YouTube.

On the Google end, they have a tough game to play. With $1.65 billion paid out and substantial costs in keeping the site operating, the company has to find a way not only to make YouTube pay for itself, but to do such without turning it into nothing but an ad machine, which would be counterproductive and could cause users to abandon the site. Expectations are high for the company, from both the viewpoint of the large media giants and from the users who want to watch videos without spending half the time looking at advertisements.




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