Google: YouTube Will Soon Be “Very Profitable”

YouTube will be “very profitable” in the “not too distant future,” Google CFO Patrick Pichette said on the company’s quarterly earnings call today. The site’s monetized views have “more than tripled in the past year,” according to Jonathan Rosenberg, SVP of product management. “We’re now monetizing billions of views of partner videos every month.”

Google CEO Eric Schmidt, who’d previously given YouTube a few public spankings about pulling its weight in revenue, said today he was “very pleased” with the site’s money-making trajectory.

Brand display advertising is doing well on YouTube, noted Schmidt and Nikesh Arora, who is president of global sales operations and business development. And the majority of YouTube views are not professional content, Schmidt added. Google execs called out featured videos on search, the YouTube home page masthead, pre-rolls and long-form content as areas for revenue growth.

YouTube’s bottom line gets a lot of ink, considering there is virtually no confirmed information about the site’s expenses and revenue. Credit Suisse had made a splash in April by estimating that YouTube could lose $470 million this year, however an infrastructure research firm disputed that report, saying the bank had underestimated Google’s ability to minimize costs.

As for the percentage of video views that YouTube monetizes, Rosenberg gave Google’s first real comment on the matter — if only on a relative basis. A YouTube exec had previously said that the assertion that YouTube only monetizes 3-4 percent of views is “grossly inaccurate.” The company gave the slimmest of indications that the portion was at least 9 percent of views, and perhaps higher. In those single digits, tripling might not be as huge of a jump as it seems.

As for pre-rolls, embracing them shows a change on YouTube’s part to reflect the reality of serving video. The site had scorned the format early on for being unfriendly to users. In August 2007, a YouTube product manager told us, “Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.” Today, Arora said on the call that YouTube users now accept that pre-rolls are a necessary corollary to premium content. Rosenberg noted the site sees “very little drop-off” when it shows pre-rolls.

Correction: The initial version of this story misattributed Patrick Pichette’s quote from the earning call about YouTube profitability to Nikesh Arora.

With reporting by Jordan Golson.

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