Ever wonder how much YouTube makes off these Internet sensations like Psy? Wonder no more! Quora user Amar Prabhu did the research so I didn’t have to:
Estimated cost for running the servers: $296,360
Estimated revenue from the ads: $348,285
No surprises, YouTube is projected to make a profit this year
This is one of those innocent questions that has very complex ramifications – there are at least 400 variables in this question. You heard me right – I doubt if even Google themselves can answer this question accurately for just one video, let alone someone without access to all their energy audits and statistics. There are many types of servers (for recommendation, load balancing, streaming to different devices, search queries, page servers, caching etc) spread over several locations all over the world, file types and formats for a plethora of consumer devices based on resolution, type of device, bandwidth of the consumer and the hardware capability. The type and energy costs of the infrastructure are closely guarded trade secrets of Google as that is how they gain a competitive advantage. The networking gear purchase/sourcing/operation wars between Google,Facebook, and Amazon are stories of delight and are shaping the energy needs of these companies, and very little about these are public knowledge, which means we cannot determine an accurate number unless someone from Google does a lot of digging and makes the info public.
All that said and done, I will take the bait. Assuming costs are similar to Amazon Cloudfront and compensating for the approximate profit margin of Amazon in their cloud business, it is possible to get a close approximation.
As I pointed out before, there are at least 80 different files that need to be encoded and stored for the approximately 4:15 sec video including credits. There are 6 different resolutions – low, medium, SD, qHD, HD, full HD; 3 different types of devices – PC, Tablets, Mobile devices; and 4 different file types/video codec combinations – MP4/H264, WebM/VP8, flv/H264, and 3GP/MP4V. Based on the browser version, availability of flash etc, a container and codec is selected for streaming.
A matrix of resolution, bandwidth, and the video format selected
The storage and encoding costs are close to none – $0.025 per GB. The storage required varies from 90MB/Min for high quality HD resolutions for a PC on fibre based broadband to less than 1MB/Min for a low resolution mobile on a 2G network.
File sizes total, for standard compression ratios: 2.8 GB.
Cost – $2.2 for the triple redundant storage across maximum of 30 locations.
These encoded files have been streamed 530 million times. The resolution at which a video is streamed varies between devices based on bandwidth and user choice. The selected resolution is then streamed for viewing. It costs about 0.01 per GB for streaming a video.
Map of World Wide distribution of high speed Internet access.
Based on mobile vs desktop usage, YouTube gets about 8-10% of page views from mobile devices. Based on broadband and 3G penetration rates, 63% of users watch videos in high resolution and others, not so lucky, they watch the videos in the lesser resolutions in many different formats. So, based on these statistics:
High resolution streaming: 333.9 million views
Low resolution streaming: 196.1 million views
Bandwidth consumed for high resolution, average of 80MB/view: 24 PB
Bandwidth consumed for low resolution, average of 12MB/view: 2.19PB
Cost for high resolution streaming, at $10485/PB: $251658.24
Cost for low resolution streaming, at $10485/PB: $22963.81
The cost includes server costs for hosting and distributing the content as well. This number is very hard to arrive at as this alone has about another 30 unknown variables, so rolling with static pages, a standard YouTube video page is about 580KB in size, without the pictures. Another 900KB has to be added, for the picture thumbnails and other static resources downloaded as a part of the page. It should cost about $0.03 per GB to distribute page content – lot of other variables like user login management, recommendations etc involve back end services, so it costs more to serve up pages than to stream videos on a per GB basis.
Size of pages distributed: 724609.37 GB
Cost for serving these pages: $21738.28
Revenue per view can be calculated from the revenue sharing model of YouTube. For instance, Shane Dawson TV had 672,756,760 video views and earned about $ 315K. So as per these indicators, earnings average $0.46 per 1000 views. Assuming the cut taken is 30%, similar to its apps, that makes: $243,800 for the content guy, and $104,485 for YouTube. Assuming a 100% cut for simplicity, Google is richer by $348,285.
I am not affiliated with Google, and this is an indicator, not a real calculation at all. Note the number of times secret, approximate, and assumption have been used. The error margin for each assumption made is about 30%, and I have made a LOT of assumptions here. Take it with a truckload of salt.
Sources used for reference: