YouTube began when PayPal employees started to create a video-sharing website on which users could upload, share, and view videos. The Internet domain name "youtube.com" was activated on February 14, 2005.
Founding (2005)
YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim, who were all early employees of PayPal. Prior to PayPal, Hurley studied design at Indiana University of Pennsylvania. Chen and Karim studied computer science together at the University of Illinois at Urbana-Champaign. YouTube's early headquarters were situated above a pizzeria and Japanese restaurant in San Mateo, California.
The domain name "YouTube.com" was activated on February 14, 2005, and the website was developed over the subsequent months. The creators offered the public a preview of the site in May 2005, six months before YouTube made its official debut. Like many technology startups, YouTube was started as an angel-funded enterprise from a makeshift office in a garage. In November 2005, venture firm Sequoia Capital invested an initial $3.5 million; additionally, Roelof Botha, partner of the firm and former CEO of PayPal, joined the YouTube board of directors. In April 2006, Sequoia and Artis Capital Management put an additional $8 million into the company, which had experienced hugely popular growth within its first few months. The first YouTube video was titled Me at the zoo, and shows co-founder Jawed Karim at the San Diego Zoo. The video was uploaded on April 23, 2005, and can still be viewed on the site.
Growth (2006)
During the summer of 2006, YouTube was one of the fastest growing sites on the Web, uploading more than 65,000 new videos and delivering 100 million video views per day in July. It was ranked the fifth most popular website on Alexa, far out-pacing even MySpace's rate of growth. The website averaged nearly 20 million visitors per month, according to Nielsen/NetRatings, where around 44% were female, 56% male, and the 12- to 17-year-old age group was dominant. YouTube's pre-eminence in the online market was substantial. According to the website Hitwise.com, YouTube commanded up to 64% of the UK online video market.
YouTube entered into a marketing and advertising partnership with NBC in June 2006.
Purchase by Google (2006)
On October 9, 2006, it was announced that the company would be purchased by Google for US$1.65 billion in stock. The purchase agreement between Google and YouTube came after YouTube presented three agreements with media companies in an attempt to escape the threat of copyright-infringement lawsuits. YouTube planned to continue operating independently, with its co-founders and 67 employees working within Google. The deal to acquire YouTube closed on November 13, and was, at the time, Google's second largest acquisition. Google's February 7, 2007 SEC filing revealed the breakdown of profits for YouTube's investors after the sale to Google. At the time of reporting, Chad Hurley's at more than $395 million and Steve Chen's at more than $326 million.
Person of the year (2006)
Time magazine featured a YouTube screen with a large mirror as its annual 'Person of the Year', citing user-created media such as YouTube, and featuring the site's originators along with several content creators. The Wall Street Journal and New York Times have also reviewed posted content on YouTube, and its effects upon corporate communications and recruitment in 2006. PC World Magazine named YouTube the ninth of the Top 10 Best Products of 2006. In 2007, both Sports Illustrated and Dime Magazine featured stellar reviews of a basketball highlight video titled, The Ultimate Pistol Pete Maravich MIX. Because of its acquisition by Google, it is sometimes referred to as "GooTube."
Continued growth (2007-2013)
It is estimated that in 2007 YouTube consumed as much bandwidth as the entire Internet in 2000.
Originating in 2007, the YouTube Awards are annual awards given out in recognition of the best YouTube videos of the preceding year as voted by the YouTube community.
On July 23, 2007 and November 28, 2007, CNN and YouTube produced televised presidential debates in which Democratic and Republican US presidential hopefuls fielded questions submitted through YouTube.
In November 2008, YouTube reached an agreement with MGM, Lions Gate Entertainment, and CBS, allowing the companies to post full-length films and television episodes on the site, accompanied by advertisements in a section for US viewers called "Shows". The move was intended to create competition with websites such as Hulu, which features material from NBC, Fox, and Disney.
YouTube was awarded a 2008 Peabody Award and cited for being "a 'Speakers' Corner' that both embodies and promotes democracy".
In early 2009, YouTube registered the domain youtube-nocookie.com for videos embedded on United States federal government websites.
In November 2009, YouTube launched a version of "Shows" available to UK viewers, offering around 4,000 full-length shows from more than 60 partners.
In December 2009, Entertainment Weekly placed YouTube on its end-of-the-decade "best-of" list, describing it as: "Providing a safe home for piano-playing cats, celeb goof-ups, and overzealous lip-synchers since 2005."
In January 2010, YouTube introduced an online film rentals service, which is currently available only to users in the US, Canada and the UK. The service offers over 6,000 films.
In March 2010, YouTube began free streaming of certain content, including 60 cricket matches of the Indian Premier League. According to YouTube, this was the first worldwide free online broadcast of a major sporting event.
On March 31, 2010, the YouTube website launched a new design, with the aim of simplifying the interface and increasing the time users spend on the site. Google product manager Shiva Rajaraman commented: "We really felt like we needed to step back and remove the clutter." In May 2010, it was reported that YouTube was serving more than two billion videos a day, which it described as "nearly double the prime-time audience of all three major US television networks combined". In May 2011, YouTube reported in its company blog that the site was receiving more than three billion views per day. In January 2012, YouTube stated that the figure had increased to four billion videos streamed per day.
According to May 2010 data published by market research company comScore, YouTube was the dominant provider of online video in the United States, with a market share of roughly 43 percent and more than 14 billion videos viewed during May.
In October 2010, Hurley announced that he would be stepping down as chief executive officer of YouTube to take an advisory role, and that Salar Kamangar would take over as head of the company.
In April 2011, James Zern, a YouTube software engineer, revealed that 30 percent of videos accounted for 99 percent of views on the site.
In November 2011, the Google+ social networking site was integrated directly with YouTube and the Chrome web browser, allowing YouTube videos to be viewed from within the Google+ interface. In December 2011, YouTube launched a new version of the site interface, with the video channels displayed in a central column on the home page, similar to the news feeds of social networking sites. At the same time, a new version of the YouTube logo was introduced with a darker shade of red, the first change in design since October 2006.
In 2012, YouTube said that roughly 60 hours of new videos are uploaded to the site every minute, and that around three quarters of the material comes from outside the U.S. The site has eight hundred million unique users a month.
Starting in 2010 and continuing to the present, Alexa ranked YouTube as the third most visited website on the Internet, behind Google and Facebook.
In late 2011 and early 2012, YouTube launched over 100 "premium" or "original" channels. It was reported the initiative cost $100 million. Two years later, in November 2013, it was documented that the landing page of the original channels became a 404 error page. Despite this, original channels such as SourceFed and Crash Course were able to be successful.
In October 2012, for the first-time ever, YouTube offered a live stream of the U.S. presidential debate and partnered with ABC News to do so.
On December 4, 2012, YouTube relaunched its design and layout which is very similar to the mobile and tablet app version of the site.
On December 21, 2012, Gangnam Style became the first YouTube video to surpass one billion views.
On March 21, 2013, the number of unique users visiting YouTube every month reached 1 billion.
In 2013, YouTube continued to reach out to mainstream media, launching YouTube Comedy Week and the YouTube Music Awards. Both events were met with negative to mixed reception. In November 2013, YouTube's own YouTube channel had surpassed Felix Kjellberg's PewDiePie channel to become the most subscribed channel on the website. This was due to auto-suggesting new users to subscribe to the channel upon registration.
Internationalization
On June 19, 2007, in Paris Eric E. Schmidt launched the new localization system. The entire interface of the website is now available with localized versions in numerous countries:
Google aims to compete with local videosharing websites like Dailymotion in France. It also made an agreement with local television stations like M6 and France Télévisions to legally broadcast video content.
On October 17, 2007, it was announced that a Hong Kong version had been launched. YouTube's Steve Chen said its next target will be Taiwan.
YouTube was blocked from Mainland China from October 18 due to the censorship of the Taiwanese flag. URLs to YouTube were redirected to China's own search engine, Baidu. It was subsequently unblocked on October 31.
Business model, advertising, and profits
Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month.
Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing. In June 2008, a Forbes magazine article projected the 2008 revenue at $200 million, noting progress in advertising sales.
Some industry commentators have speculated that YouTube's running costs--specifically the bandwidth required--may be as high as 5 to 6 million dollars per month, thereby fueling criticisms that the company, like many Internet startups, did not have a viably implemented business model. Advertisements were launched on the site beginning in March 2006. In April, YouTube started using Google AdSense. YouTube subsequently stopped using AdSense but has resumed in local regions.
Advertising is YouTube's central mechanism for gaining revenue. This issue has also been taken up in scientific analysis. Don Tapscott and Anthony D. Williams argue in their book Wikinomics that YouTube is an example for an economy that is based on mass collaboration and makes use of the Internet. "Whether your business is closer to Boeing or P&G, or more like YouTube or flickr, there are vast pools of external talent that you can tap with the right approach. Companies that adopt these models can drive important changes in their industries and rewrite the rules of competition" "new business models for open content will not come from traditional media establishments, but from companies such as Google, Yahoo, and YouTube. This new generation of companies is not burned by the legacies that inhibit the publishing incumbents, so they can be much more agile in responding to customer demands. More important, they understand that you don't need to control the quantity and destiny of bits if they can provide compelling venues in which people build communities around sharing and remixing content. Free content is just the lure on which they layer revenue from advertising and premium services".
Tapscott and Williams argue that it is important for new media companies to find ways to make a profit with the help of peer-produced content. The new Internet economy that they term Wikinomics would be based on the principles of openness, peering, sharing, and acting globally. Companies could make use of these principles in order to gain profit with the help of Web 2.0 applications: "Companies can design and assemble products with their customers, and in some cases customers can do the majority of the value creation". Tapscott and Williams argue that the outcome will be an economic democracy.
There are other views in the debate that agree with Tapscott and Williams that it is increasingly based on harnessing open source/content, networking, sharing, and peering, but they argue that the result is not an economic democracy, but a subtle form and deepening of exploitation, in which labour costs are reduced by Internet-based global outsourcing.
The second view is e.g. taken by Christian Fuchs in his book "Internet and Society". He argues that YouTube is an example of a business model that is based on combining the gift with the commodity. The first is free, the second yields profit. The novel aspect of this business strategy is that it combines what seems at first to be different, the gift and the commodity. YouTube would give free access to its users, the more users, the more profit it can potentially make because it can in principle increase advertisement rates and will gain further interest of advertisers. YouTube would sell its audience that it gains by free access to its advertising customers.
"Commodified Internet spaces are always profit oriented, but the goods they provide are not necessarily exchange value and market oriented; in some cases (such as Google, Yahoo, MySpace, YouTube, Netscape), free goods or platforms are provided as gifts in order to drive up the number of users so that high advertisement rates can be charged in order to achieve profit."
In June 2009, BusinessWeek reported that, according to San Francisco-based IT consulting company RampRate, YouTube was far closer to profitability than previous reports, including the April 2009, projection by investment bank Credit Suisse estimating YouTube would lose as much as $470 million in 2009. RampRate's report pegged that number at no more than $174 million.
In May 2013, YouTube launched a pilot program to begin offering some content providers the ability to charge $0.99 per month or more for certain channels, but the vast majority of its videos would remain free to view.
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