YouTube is under-monetized
The sea change in the content ecosystem is just getting started
youtube appears to make very little money per stream-time, relative to the competition
as cable dies, youtube rises
those cableTV advertising dollars have to go somewhere, right?
👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. First, sign up for your free trial of AlphaSense, because why wouldn’t you?
A plug for our sponsor, AlphaSense
AlphaSense is actually an amazing one-stop-shop for:
expert calls (especially since it acquired Tegus),
company-filings, and
analyst research;
plus, it’s got a pretty neat generative AI-search tool that I’ve been playing with a lot (which makes searching across the corpus of information much easier than before).
It’s a genuinely fun and very useful platform, and as part of the sponsorship, Random Walk readers have ACCESS TO A FREE TRIAL, which you’d be a fool not to try (just by clicking through the link below):
FREE TRIAL! FREE TRIAL! FREE TRIAL!Give it a shot. It’s a great platform.
Gotta keep it short today, because we had another stellar Idea Generator dinner last night, and it was a very busy day.
The undermonetization of streaming
I found this chart on streaming monetization (or the lack thereof) rather striking:
By some estimates, YouTube generates only ~20% the revenue per watch-time as Facebook.
Taking this at face value, it means that youtube still has a lot of monetization runway left to go.1
I only bring this up because it’s still underestimated the extent to which (a) cable TV is dying (with its audience); and (b) those advertising dollars (from pharma, and cars, mostly) will have to go somewhere—and one would expect the dollars go where the eyeballs go.
YouTube is already a big deal, but it seems to be an ever-bigger deal yet.
It’s incredibly popular, amongst both adults and teens:
YouTube is by far the most ubiquitous streaming source, with north of 85% of adults and 90% of teens reporting at least some use.
Now, the fact that lots of people answer “yes” to the question “have you ever used YouTube” doesn’t necessarily mean that YouTube is terribly popular. It just means that it’s everywhere.
But, according to Sensor Tower, Daily Active Users (DAUs) are growing at a healthy clip:
YouTube’s DAUs continue to steadily compound ~5-8% yoy.
DAUs are a much higher bar than “ever use.”2
That’s it.
Someone smarter and more knowledgeable will explain all the details, but there’s a sea change underway in the content world, and it’s really only just get started.
Other links
MLB plots a new TV model. See above.
Anthropic raises $3.5B, valuing the company at $61.5B. Me too.
How big is America’s stock market bubble? Pretty big, but it’s more growth-sensitive, then “bubble.”
Previously, on Random Walk
Random Walk is an idea company dedicated to the discovery of idea alpha. Find differentiated data, perspectives and people, and keep your information mix lively. A foolish consistency is the hobgoblin of small minds. Fight the Great Idea Stagnation. Join Random Walk. Follow me on twitter. Follow me on substack:
To be fair, when it come to streaming economics, I’m even more out of my depth than usual.
Contrast DAUs with the incredibly cold real estate market:
No one is that interested in real estate apps.
Is that gross revenue or revenue net of payout to the content creators? I ask this because, looking at the content people are able to make money from semi-professionally, it’s clear Alphabet is paying creators pretty well.
I could not figure out how a company could have a profit margin of 545%, foolishly assuming the largest margin one could have was 100% (thieves, with no expenses achieve 100% margins).
Yet, there it was, Bloomberg reporting that DeepSeek claimed a 545% margin.
On reading the article, it turns out that DeepSeek means revenue is 545% of costs. So that's it! DeepSeek claims gross margins of 84%. Not world leading for a SaaS business, but pretty good considering the negative gross margins some leading AI companies are achieving. Not bad with the crippled chips the export embargo allows DeepSeek to use!