How does YouTube earn money?

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Started by 3 PayPal employees in 2005, YouTube was sold to Google for a mammoth $1.65 billion. The video sharing site is one of the biggest money earning subsidiaries of Google.

Having said this, most people find it confusing as how could YouTube earn money when its absolutely free and doesn’t charge a single penny for views.

Some days ago, one of my friend asked similar questions and urged me to find a solid answer for him. So I started my research, and here are the results I’ve got,

youtube earn money

Capital Investment

A big chunk of YouTube earning is from Investments.

Google is the biggest company of web. More and more firms invest in it, so there is lot of money invested into the company that channelizes to its different services. YouTube too receives a good amount from investments. As Google is open for investments (NASDAQ: GOOG), it receives money for every share sold.

Millions are invested in the company by shareholders by purchasing shares.

Advertising: Biggest source

The biggest source through which YouTube earn money is Google AdWords. Yes, its the same service that allows advertisers to post their ads on different services owned by Google, and websites publishing Google ads.

YouTube display ad before the start and at the bottom of a video. Not only this, ads are shown around the corner of the window. They are all sources of YouTube’s earnings.

Millions of videos are uploaded daily, 10 percent of them have ads placed on them.

Just like its parent, Google, advertisements brings over 90 percent revenue to YouTube.

Sponsored videos

YouTube earn money from advertisers for promoting their videos by labeling them as ‘sponsored videos’

Its the second biggest source of YouTube’s earning.

Such videos are usually visible at the top right corner with khaki background color. They are the videos that’s promoted by firms on YouTube for increasing views.

Such videos are temporary, and primarily includes upcoming movie trailers, newly launched services and seasonal offers.

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