27 Dec Q. The last question. Videos are available on YouTube for free. How does YouTube benefit out of this? What is their revenue model ?
Youtube might look to be free but it is primarily an advertising driven business (where it places pre-roll and mid-roll ads on videos) which has an affiliate component to it (video creators are paid based on the number of views garnered by their channel). Apart from this Youtube also earns through a subscription based model ‘Youtube Red’ which provides an enhanced, uninterrupted experience across YouTube, YouTube Music, and YouTube Gaming, by charging just a nominal amount for membership. In US we have YouTube TV, which is a live TV streaming service which lets the subscribers watch cable channels like ABC, NBC, FOX, ESPN, Disney, etc on Youtube for a subscription.
The essential model for these platforms is to provide service for free to consumers, make them used to the service initially and gradually earn revenue through advertisements and promotional placements along-with consumer-led subscriptions. From my observation, this has been and will remain the bread- and -butter model for digital revenue for a long time to come.
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