Revealing the Facts: How Does YouTube Work?

The dramatic rise of YouTube and other over-the-top video services has totally changed the viewing habits around the world. Considering how routinely we access content via apps like YouTube or Netflix, it’s really hard to believe that before some years, it was virtually impossible to transmit or view video over the internet.

Hence, it’s no secret that YouTube is on full boom these days. People are likely to find such platforms like YouTube where they can be popular and can earn from their talents. Let us have a quick glance on the journey of YouTube.

Since its first launch in 2005, YouTube quickly became one of the best destinations for video content online that attracts over one billion daily users. This Google-owned site started gaining popularity when they enabled users to share their videos with everyone across the globe. Google acquired YouTube for a whopping $1.65 billion which later ended with the long-running questions like how does YouTube work? Or what will be its business model? The users over here can share anything they want whether it is an amusing clip of their pet, or any delicious cooking recipe, or footage of them dancing, and much more.

This platform is available in 76 different languages and is being used by celebrities, big brands, and many others. There are YouTube influencers who will promote themselves to earn money. But the question over here is ‘how does YouTube work?

The popularity of Youtube is mainly due to the easiness of the website to be used. YouTube got the views numbering in millions after they contacted major companies to put their content on the platform. YouTube, by now, is worth more than $75 billion. While its growth is a giant history, let us have a look at ‘how does YouTube work?’ to deeply understand their business strategies.

How does YouTube work?

Every day more than 4 billion videos are being viewed on YouTube, which shows that the user experience is not driving away visitors. And the most curious question coming to your mind ‘how does YouTube work?’ Let us throw some light upon it.

YouTube is an online capital of all kind videos. Here as per the YouTube algorithm, what you have watched or what you have shared or liked, you as a YouTube user will get video suggestions on your homepage in the same fashion. Here, when you as a YouTube user upload a video in any range of file formats, it will convert it into its Adobe Flash video format. This will enable the video to be played using YouTube’s Flash player. Yet, YouTube is all set to work with a unique feature that aims at making the creator and user experience more beneficial and enjoyable. Every video is stored at the Google data center. The process of uploading and downloading both will be done over there.

YouTube has a paid product named “YouTube Premium” which even includes YouTube Music, YouTube Gaming and YouTube Kids apps. When you go for this subscription, you’ll get the ad-free viewing, video downloads, background plays, and original programming.

A lot of buzzes had been generated due to the bidding of the keywords. So what makes people bid to grab the titles instead of simply using those words? Well, let’s see how it works. You might have noticed that if you type something in the google search bar, suggestions will be popping down in the scroll below. Hence the same works with YouTube, whenever a viewer search, some initial words on the search bar pop down will be shown. Hence when you want the name of your video in the top, as soon as the search is being made, you have to bid an amount for that. Hence, the best bidder will get the title.

Another way, here is the live stream content on YouTube. Earlier in 2010, YouTube partnered, with the board of control of cricket and broadcasters to stream live cricket on their website. This was the first time ever a major sporting tournament was live. This way further many sports & entertainment events were planned to stream live and partnered with.

For the YouTube app, there are mainly 5 tabs available.

Home, that is the homepage to find all the suggested video as per YouTube’s algorithm. As mentioned above, it will be based on your past view history. With that, here you can even subscribe to your favorite uploaders, and so their uploaded videos will be on priority for the homepage. With that, you will even get the notification for the new uploads.

Subscriptions, here for this tab you will get all the content about the channels that you have subscribed to. This can be given as a filtered timeline for your likings.

Inbox, it is when you have uploaded a video and the other users will comment or share the video you have uploaded. It can be said as a mailbox where all your messages and the notifications will be stored. Here you will get a message or notification when someone replies to your comment. Inbox can be said as your one-stop tab of activities on your profile.

Trending, this section is like an ocean of new discovery. Trends are made out of the number of views and likes. The thing to note over here is that trends differ on the location you’re based at. Videos which are being liked and viewed most will be based on these criteria.

Library, this is the place where all your offline videos are stored. You can watch the videos anytime without the internet connection.

With all the above, YouTube content is a divide between n-number of verticals like education, fashion, telecommunication, travel, B2B, etc. Every vertical has a different cost per view. As per the data set, it’s interesting that the average cost per view is $0.044 or 4 cents per view. The most expensive vertical over here is Healthcare & Insurance and Home & Garden.

This was all about ‘how does YouTube work?’ but any business cannot earn without a business model and following a stable revenue stream.

YouTube Business Model

When things come to the YouTube business model, the actual product that it sells is its users. This can be said especially an advertisement based business model. As said before, the company pulls over 1.8 billion users per month. Google records their activities on other websites and YouTube further combines it with their profile which in turn helps advertisers in targeted ads. YouTube business model can have further categories like the subscription-based business model and freemium-based business model. To know more about all the business models out there, read our blog “Top 19 business models that will hail the startups”.

Subscription-based business model

YouTube subscription business model compromises “YouTube Premium” which was formerly known as YouTube Red. It includes the features across YouTube and the YouTube Music app as well as gives access to all the YouTube originals, YouTube Gaming, and YouTube Kids. YouTube Premium starts at $11.99 per month. It includes ad-free videos, keeps the videos playing in the background while using other apps, saving videos on a mobile device and watching it later offline, etc. These advanced things are included for every YouTube Premium part like music, originals, gaming, and kids.

Freemium Business Model

YouTube is even considered under the freemium based business model. As over here, the users are able to access the free videos. This platform is even available for free users up to a great extent. The users will be having limited access to the products which can be unlocked when a user buys it. When a user needs to access the advanced features, then the subscription business model comes in picture. Henceforth, looking at the structure of the Youtube business model, we can say that it is subscription as well as a freemium business model as it is free to use YouTube to watch unlimited videos for those who don’t get irritated with ads.

YouTube Revenue Model

YouTube’s product is users, right? We can say that YouTube is essentially selling its users to various advertisers. But yes, they have other sources of revenue as well.

Most of the videos on YouTube are not charged and completely free for users and there is only one reason behind it. That is, they get such a giant number of visitors every day. The number ranges more than 30 million. And this attracts a large number of advertisers to YouTube. One method being followed over here is through sponsored videos. The advertiser will pay to the YouTube as per the views they get once the ad has been selected. In a secondary way, it’s all about the embedded video (advertisement) being played at the beginning of the original video. Here as well, YouTube gets paid. The third type over here is the advertisements being displayed on the homepage when we open YouTube.

With advertisements, the premium services play a major role in the YouTube revenue generation. It earns huge revenue from the premium services they offer just like YouTube Red and YouTube TV. It has even launched a program where the paid channels will be available and the subscribers will be charged the monthly fees for the access.

One can believe that YouTube must be making a lot of money, being the most viewed app. With the knowledge of ‘how does YouTube work?’ It is really important to understand the YouTube business model and YouTube revenue model.

The Future of YouTube

Looking at all the sources of revenue and the costs that the company makes to host the videos, YouTube is making significant profits. YouTube users are making money from the third parties just with the help of their knowledge and promoting products. YouTube is the second most visited site in the world which gives them an edge to begin. With capitalizing on this fact massively, YouTube can become the top profitable businesses ever to exist. YouTube will be a money-making machine soon. That is all YouTube for you.

These days more and more content creators are looking for platforms like YouTube. And that’s why it is must to have an insight on ‘how does YouTube work?’ If you are attracted to start with your own website like YouTube, we at NCrypted provides you with the best solution as per your requirements. Have a look at our YouTube clone script, which you can even customize as you require. Contact us for having an in-depth detail on it.

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