We don’t know, because right now youtube is one black box in Google’s finance sheets. We don’t know if it is a loss leader, which I think is very likely. Imagine youtube was a separate company that always ran in the red and another private company solely footed their bill. Would you trust YouTube’s neutrality then? Wouldn’t that explicate why competition is having difficulty emerging?

Or imagine YouTube were to split into two; YouTube the distribution platform and YouTube the recommendation engine. Imagine Youtube the platform had to license content publicly. Now it is much more likely to have competition emerging and end users benefiting from it.

YouTube was much more profitable before the current era of partisan activists engaging in targeted campaigns of harassment against specific brands when their ads appear next to controversial content.

Before, industry players, YouTubers, and users largely didn't mind. Now, there is a systemic chilling effect in the form of demonetization, algorithm shenanigans, and banning.

To recover revenue under this new paradigm, YouTube is catering to "brand-safe" corporate media productions and surfacing their videos much more highly than those of independent creators. There's likely media money involved as well, much like how Yelp and food delivery apps rank restaurants.

> YouTube was much more profitable before the current era.

We don't know if it has ever been profitable at all.

Google started breaking out youtube numbers in their recent quarterly results (once sundar became Alphabet CEO)

That is only the revenue, which is mostly meaningless because most of the revenue is disbursed to content creators. We also don’t know how much the whole system costs to run.

I bet even Google doesn't really know. It's pretty hard to break out cost numbers within a company with so many shared services.

Oh, they know. They have to know server utilisation to be able to bill their cloud customers and I bet they have even better data for themselves.

That's not the same thing. They had detailed server utilisation data when I was there years ago, and they had models that tried to translate that into some sort of dollar cost, but that didn't mean they really knew.

You probably can't know. The ground truth would be if YouTube were spun out and had to rent its infrastructure from Google directly via Google Cloud. But GCloud doesn't actually sell the infrastructure they use, as far as I know - for instance the search engine, the ads engine, the anti-abuse engines, Borg, the edge networks. AFAIK most of the stuff that YouTube relies so heavily on isn't actually available to buy at any price.

Pricing is hard work, too. What price should Google charge to license out their search engine tech for competing video sites? There's no existing market for that kind of tech that could provide an obvious price point.

For an integrated operation like Google/YouTube you can't ever truly say if it's profitable or not. The division of costs and benefits will always be rather arbitrary.

> You probably can't know

I disagree both on knowability and what needs to be known. The point of the exercise is not having a calculation down to the cent. We don’t even know if the order of magnitute of the revenue and the cost is the same. By its nature I would expect youtube to be very IO and compute heavy, which would dominate the cost function, to the point of rendering rest of your list into bells and whistles.

> Pricing is hard work, too. What price should Google charge to license out their search engine tech for competing video sites? There's no existing market

That is precisely the function of making a market, supply and demand meet and iterate over the price. Right now there is no price because there is no market.

>Hey boss can I have another million dollars for my project?

>>What's the ROI?

>Idk should be good though.

>>Here's three million just in case.

A conversation that no one has ever had.

Probably, as it would have fewer conflicts of interests and relationships with foreign dictatorships.

...but ideally, we would have multiple YouTube competitors, that would allow content creators vote with their choice to use Google.

YouTube has multiple competitors.

One of them is even a heavyweight - Facebook. Did you not realise that Facebook hosted videos? Maybe you're unaware that Instagram has Instagram TV section...

> Would an independent YouTube be less susceptible to these requests?

You would almost certainly need something like the Paramount Consent Decrees to structure the marketplace correctly and to foster the kind of competition that would prevent a single player from being in such a vulnerable position.

This is the reason I really hope we see an uptick in distributed applications.