this post was submitted on 14 Jan 2024
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Interest rates have been low enough for long enough that many companies have been running on the "fake it 'til you make it" philosophy forever. Air BnB, Door Dash, Lyft, and countless others have never been profitable. But they survive by constantly taking out loans and collecting new investor money to increase their market share (the infinite growth scheme), hoping that they'll either eventually have enough impetus to monopolize a market and bully it into being profitable, or get bought up by Google and co for a rich payout.
This is how YouTube and Netflix got profitable. They ran at a loss until they were popular enough to turn a profit, and then switched to maximizing that profit. I imagine the same is true for the big social media sites as well. Run at a loss until you have a big enough userbase to attract advertisers. And this is exactly why Tumblr was never profitable and Verizon basically killed it trying to make it profitable. Tumblr's population has always been the groups advertisers like the least - minorities, LGBTQ groups, sex workers, and artists/creatives. So Verizon tried to sanitize it by purging them to make it attractive to advertisers, and consequently killed the userbase that gave it it's potential for ad profits in the process.
I see what you are saying, but Google is still not bleeding money and YouTube has become very well established already. In fact, for years YouTube contributes to Google's primary revenue source: Advertising. Of course, this is why they are opposed to ad blockers, that much makes perfect sense.
But I don't see any indication that it's not making ends meet. And I'm not taking an executive's word as proof, much less one from a whole different company. It's expected that they will say whatever make their actions look good, whether or not it's true.
Yeah, I don't mean that YouTube is unprofitable. It's probably hugely profitable, and now they're focusing on maximizing that profit.
But with something like Twitch, which claims to have been unprofitable for a decade or more, I can believe that simply because of the low interest rates that allow them to perpetually keep burning money and that the value of these platforms is measured by the potential profit from the userbase - whether through ad revenue, data, or something else - rather than the money they're making right now. This is why Verizon bought Tumblr for like a billion dollars or whatever. That was the estimated value of the company, despite it never turning a profit, simply based on the potential revenue from its userbase. It's also why Verizon ended up selling Tumblr for like 1% of what they paid for it 3 years later. Because they ran off that userbase and the rest weren't deemed valuable for advertisers.