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All eyes on YouTube

Reported by Ryan Newman, The Motley Fool.
Saturday, March 23, 2013
World's kookiest billionairesBillionaires and their eccentric and outlandish publicity stunts.

Overnight, YouTube took great pleasure in announcing that it had hit the remarkable milestone of 1 billion unique monthly users, standing very close to the number of regular users that Facebook (NASDAQ: FB) currently boasts.

Adding to the announcement in a blog post, YouTube stated that “nearly one out of every two people on the Internet visits YouTube”. What could be considered even more of an achievement is that it was only in May last year that the company announced it had topped 800 million monthly users – an increase of 25% since.

Much like Mark Zuckerberg founded Facebook in his college dormitory, YouTube was founded in 2005 in a small garage by three former PayPal – a subsidary of eBay Inc. (NASDAQ: EBAY)employees. The website became live in November that year.

The solid achievement has proven Youtube as being one of Google’s (NASDAQ: GOOG) most successful acquisitions in terms of views, after purchasing Youtube for a whopping $1.65bn in October 2006.

Youtube is now second only behind Google itself in terms of having the most search queries. Meanwhile, the site also challenges Facebook as the largest social network, with the added ability for users to ‘comment’ on and ‘like’ videos and share them with friends.

Concern has been raised however, regarding the levels of revenue that Youtube brings its owner. Google has described the video database’s revenue as ‘immaterial’ in a number of annual reports.

Whilst there is no question at all that there are a very large number of paid video advertisements on the site, many of the most popular videos – such as movie trailers or internet sensations like Psy’s Gangnam Style in 2012 (which was the first video to hit 1 billion views) – have no video advertisements at all.

Foolish takeaway

After experiencing such rapid growth since Youtube’s birth, the website’s traffic doesn’t look like slowing down anytime soon, however, YouTube must find a way to increase revenue in order to cover its hefty bandwidth and other costs in order to become a true success for Google.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

01/10/2014 22:13Sydney, Australia. 1 October,2014
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