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YouTube has paid $ 30 billion over the past three years to its content creators.
Drew Angerer / Getty Images
On Monday, investors received an unexpected surprise: YouTube revealed that it had spent $ 30 billion over the past three years on its various creators, from its coffers full of advertising money, merchandising and other cash-generating features.
It’s a useful outreach because it gives investors an idea of how much the company spends on the large amount of site content. But it is not as useful as the most accurate information in the financial statements, which also have the advantage of complying with accounting standards.
YouTube’s $ 30 billion disclosure is another sign that tech companies are willing to spend large sums to make sure they have engaging content. Recently,
Facebook
announced a $ 1 billion spending by the end of 2022 and Bytedance-owned TikTok has pledged hundreds of millions into its creators ’fund, to name a couple. This type of spending is not exactly the same as
Netflix
(ticker: NFLX) paying for content, but it’s close.
The interesting thing about Monday’s $ 30 billion release is that it only provides us with a little more information to compare YouTube and Netflix. How De Barron pointed out in a recent cover story about Big Tech, the YouTube business gathers on Netflix, at least if we look at revenue. YouTube, a
Alphabet
(GOOGL) is expected to generate $ 28.7 billion in advertising revenue this year, compared to Wall Street’s projection of $ 29.7 billion in subscriber revenue for Netflix.
Netflix tells investors how much it spends on content, even if it takes some work and a detailed reading to get to the actual figure. And, unlike Alphabet, Netflix works essentially in a single business, selling subscriptions to its content library, so investors can also use their gross margins to know those costs as well. This year, Netflix is expected to generate an operating profit of $ 6.2 billion, a gross margin of 21%.
Investors don’t get the same amount of information with Alphabet. YouTube only discloses its advertising revenue, not subscription sales and other services. Alphabet only discloses the operating income of the entire Google Services segment, which includes all of its divisions except Google Cloud, and its Moon Moon projects located in other bets. It’s hard to know exactly how much money Alphabet invests in YouTube in general, paying for the content included.
So the disclosure leaves investors wondering, when did YouTube spend exactly $ 30 billion? In which neighborhoods? And where does it appear in the company’s financial statements?
Alphabet did not respond to any requests for comment.
Shares of the alphabet rose 1.9% to $ 2,800.83.
Write to Max A. Cherney at [email protected]