YouTube still is not turning a profit. Sources tell the Wall Street Journal that the massive video sharing service posted $4 billion in revenue in 2014. This is an improvement on 2013's posting of $3 billion, but the company is still only barely breaking even.
This push in revenue comes from a premium ads push in 2014 titled "Google Preferred," an ad package rolled out in April, 2014 where brands buy in at a premium to place their ads on what YouTube deems the top 5 percent of videos in the appropriate genre.
The Journal notes that one of the main problems facing YouTube is that most users watch its videos outside of the native YouTube environment -- those that are linked to or embedded on other sites. A Google spokesperson tells Business Insider that the majority of its traffic comes directly from YouTube.com or its mobile apps, with mobile attracting approximately 50 percent.
Google wants to make YouTube a destination where users go to the homepage directly and browse channels from there.
YouTube has invested heavily into big name partner channels like Epic Rap Battles of History, Michelle Phan and Bethany Mota, giving them resources to build followings through large-scale ad campaigns and helping to improve their original content.
The company looks to make more changes in 2015 to try and grow its revenue, capitalizing on its more than 1 billion strong user base. It will reportedly be looking to introduce new ad targeting with the help of Google's advertising engine. They will also start rolling out more auto-play videos.
There is the inherent problem that YouTube faces which it cannot monetize its entire audience because not everyone wants to be a part of the monetization program or they are not eligible. Someone who uploads cover songs on YouTube without the express consent of the label could get sued for running ads in front of that. The same lawsuit could be enforced for those who run ads in front of amateur cell-phone videos at concerts.
While YouTube is looking to generate revenue from its major partners, building out its capabilities and doing the work on its end costs money and thus why it still is only breaking even. If there is a company who can afford a slight loss, it is Google, who bought YouTube for $1.65 billion in 2006.
