Exactly a week ago, The New York Times made a splash with an article about YouTube's ad revenues, suggesting the video portal was going to start making a profit sometime this year. I remember thinking at the time that it was just another pundit's prediction—after all, our own Mark Robertson predicted YouTube would announce profitability this year, and even pegged it to the third or fourth quarter of the year.
But when a top official at Google starts making the same kind of comments, those pundits start looking pretty smart in hindsight.
Google CEO Eric Schmidt thinks YouTube is close to profitability, and has now publicly stated as much to a group of journalists gathered at French university SciencesPo, saying the site was "nearing profitability and revenue is doing quite well… it looks like it's going to be very successful.”
I have always felt like the media cared more about the timing of when YouTube turned a profit than Google did. Which is not to say that Google doesn't want a profitable YouTube… they do. I just happen to think they care about long term profitability over everything else.
It's hard to argue against what YouTube has become. It's the second-most searched site on the Internet and has become a household name around the world. The word "YouTube" is synonymous with online video. There is no question Google has taken YouTube and, since buying it, built it into something much bigger and better than it ever was before they came along. And that sets up their future revenue for years to come. The bigger the site, the more advertising dollars they can bring in. I'm not convinced they were as worried about "profiting now" as much as they were about "profiting greatly, and over a long period of time.”
Regardless, it seems that day we've been waiting for is fast approaching. Will it be in Q3 or Q4 2010, as Mark predicted? Early 2011? It's clearly too vague a statement by Schmidt for us to draw too many conclusions. "Nearing profitability" doesn't necessarily mean that it's imminent. That being said, it does start to look at little inevitable. We've been questioning and speculating about YouTube's revenues for so long, I'm not sure the online journalism community will know how to move on. Whatever will we write about when we can no longer poke fun at YouTube for losing money?