YouTube has become one of the most popular websites worldwide. Most of us have used it in order to see videos or share them with our friends, but its history stills unknown for many of us, we don’t even know if it creates benefit or not.
YouTube is a website where users can upload and share videos. YouTube Inc was founded by Chad Hurley, Steve Chen and Jawed Karim (three former employees of PayPal) in February 2005 in San Bruno, California. The domain was activated on February 15, 2005, and on April 23 the first video, Me at the Zoo (‘Me at the zoo’), was uploaded. In the spring, YouTube went online. But, developers quickly realized that users were carrying all kinds of videos, leaving behind the original idea. Traffic soared as people began to put YouTube links in their MySpace pages. The rapid growth of the site attracted Time Warner and Sequoia Capital, which invested in it. After that, in October 2005, Nike placed a spot featuring Ronaldinho and large companies began to be attracted to YouTube.
By December 2005 YouTube pages were visited approximately 50 million times a day. However, after the music video Lazy Sunday, which was originally aired on Saturday Night Live, was uploaded to YouTube, visits jumped back up to 250 million views a day. In May 2006, according Alexa.com, YouTube reached 2000 million views per day, and by mid-August had reached the 7 billion mark on several occasions. It became the tenth most visited site in the United States. At that time, the New York Post estimated that YouTube would be worth between 600 and 1000 million U.S. dollars. Some websites such as MySpace or Google Inc tried to release their own versions of YouTube but they didn’t have success.
In 2006, Google bought YouTube for 1.65 billion dollars in shares. At the time of purchase, 100 million YouTube videos were viewed and 65,000 new videos were added daily. In the earlier days, YouTube had signed two agreements with Universal Music Group and CBS, and Google had done the same with Sony BMG and Warner Music to distribute music videos.
By June 2008, 38% of the videos displayed on the Internet came from YouTube. It was estimated that the site generated U.S. $ 200 million that year. In that month, an advertisement on the YouTube home page daily cost $ 175,000, and the client must agree to spend 50,000 additional dollars on advertisements on Google or other pages on YouTube. However, because the content of the vast majority of videos on YouTube did not attract advertisers, advertisement prices collapsed. YouTube proceeded to pressure the film and television studios to produce quality video content and offered them featured channels, where they could present their film’s trailers.
Despite its success, Google doesn’t earn money with YouTube. According to a Credit Suisse analyst, YouTube would be presenting losses of U.S. $ 470 million in 2009. However, other companies estimate losses of 174.2 million.