YouTube Has Found Its Business Model, And Is Paying Out Hundreds Of Millions Of Dollars To Partners

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Google Beats In Q2 2012: Revenue Up 35 Percent To $12.21B, $2.79B In Net Income

Google SVP and chief business officer Nikesh Arora touted growth at YouTube on the company’s earnings call today, saying that the company had finally found a business model that works for the giant video site. Without giving firm numbers, Arora said the site had come a long way since 2007, when some of us in the press questioned YouTube’s ability to monetize what was then a largely user-generated content site. “We found our model,” he said.

“YouTube unites the world through video,” Arora continued. He noted several recent milestones to support that claim, including the site’s participation in this year’s Summer Olympics. YouTube will be the live streaming platform for NBC Universal in the U.S., and it will also be providing video coverage of the events for more than 60 other countries around the world.

Arora talked up growth in monetization for its content partners. He said that the site now had thousands of partners now making more than six figures a year. For those keeping track at home, that’s hundreds of millions of dollars going to content producers on the platform. YouTube also had a big digital upfront event for YouTube content, which was attended by more than 1,300 clients. At that event, it received significant commitments for ad buys from Unilever and American Express.

During the Q&A session, he said that Google had been doing work to show how effective video ads were on YouTube as compared to traditional TV advertising. While performance-based advertisers judge their ROI based on the number of clicks that YouTube viewers register, brand advertisers don’t have the same tools to measure the return they get. To measure that, YouTube’s been doing panels in certain areas. The result? Arora claims that YouTube ads show a higher ROI than TV ads for brand advertisers. Not just that, but given the number of views and viewers, as well as the comparative CPMs between online and TV, YouTube could provide greater reach than comparable TV adverts.