Estimating how much YouTube paid content creators in 2019
"Money, it's a crime / Share it fairly, but don't take a slice of my pie" - Money, Pink Floyd
Before I begin, I just wanted to say a warm welcome to all the new subscribers from last week’s Gorillaz piece. It’s exhilarating to hit the front page of Hacker News and get 10k views.
Today’s post is a bit different, where I’ll walk you through my process of estimating answers to open-ended problems; I hope it’s useful to you.
If you’re just here for the answer to the title, it’s $3-4 billion. You’re welcome.
Inspired by a question posed in the Acquired podcast’s Slack channel back in February, I’d like to estimate how much YouTube paid its creators in 2019 and take a stab at its profit margins. Before we begin, I want to note that the analysis presented here is purely my speculation based on publicly available numbers and does not reflect the positions of YouTube or its parent company Alphabet.
Approach 1 – YouTube Press Page
According to YouTube’s Press Page, YouTube users watch one billion hours of content every day. YouTube first announced this number in February 2017, so the figures for 2019 are much higher.
Alphabet’s FY2019 results show that YouTube revenue grew 86% between 2017 and 2019 (from $8.15B to $15.15B). During the same period, the average number of subscribers for the top 500 channels similarly grew by 88% (from 8.7M to 16.3M).
Applying an average 87% growth to the daily watch-hours from 2017, I’d estimate that YouTube users watched 1.87 billion hours of content every day in June 2019. Using this number as an average for the entire year (given YouTube’s growth throughout the year), YouTube users watched 682.55 billion hours of content in 2019.
According to a study by the Pew Research Center, the average length of a YouTube video is 12 minutes. With this conversion rate, YouTube videos received a mind-boggling 3.41 trillion views in 2019. Applying a rule of thumb of $1 paid out to creators per 1000 views, YouTube’s estimated payout to creators in 2019 was $3.4 billion.
Approach 2 – YouTube Rewind
According to YouTube Rewind 2019, the top 5 most viewed video games had 257.5B views between them. According to data from the Let’s Play Index, the top 5 video games on YouTube are responsible for 43.4% of gaming views among the top 500 games. Extrapolating this out and ignoring views from games that were not in the top 500, the gaming genre had an estimated 593.3 billion views on YouTube in 2019.
The previously referenced Pew Research Center study estimates that roughly 18% of videos on YouTube are gaming-related. Using this number as a proxy, YouTube had an estimated 3.3 trillion views in 2019. Applying the above rule of thumb of $1 per 1000 views, YouTube’s estimated payout to creators in 2019 was $3.3 billion.
My best guess is that YouTube paid its creators somewhere between $3-4 billion in 2019. Alphabet’s FY2019 results revealed that YouTube generated $15B in revenue for 2019. Assuming that YouTube spent a dollar on infrastructure (video hosting, marketing, employee salaries) for every dollar spent on content, YouTube was able to turn a profit of $7-9 billion in 2019 which is consistent with the lower end of journalist Shira Ovide’s range:
My birthday is coming up next week, and I’m excited to share a special edition of Reframing with you then.