Google generated $90bn last year, 6 times more than the global recorded music business

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Google had a huge year in 2016.

The company’s parent Alphabet Inc. just posted mammoth annual revenues of $90.27bn for the 12 months to end of December, up 20% year-on-year and 24% at constant currency.

This haul provided Alphabet with an operating profit of $23.7bn, and a net income of $19.48bn.

Google itself contributed the vast majority of this money.

According to cumulative quarterly filings from across 2016, Google generated $89.46bn in consolidated revenues in the year, also up 20% on $74.544bn in FY2015.

That’s around six times the $15bn-$16bn the entire global recorded music business is expected to have generated in the same time period.

In turn, $79.38bn of Google’s FY2016 revenues were generated by its advertising business.

This brings us neatly on to YouTube, which is apparently enjoying “tremendous growth”…


Although Google stopped short at giving a specific revenue figure for YouTube in its earnings call on Thursday (Jan 26), it singled out the brand as a star performer in both Q4 2016 and across the full year.

“Our growth in the fourth quarter was exceptional, with revenues up 22% year on year and 24% on a constant currency basis,” said Ruth Porat, CFO of Alphabet. “This performance was led by mobile search and YouTube.”

Speaking to investors, Porat added that Alphabet’s double-digit full-year growth in 2016 was “testament to the ongoing innovation that is driving our success in Mobile Search, YouTube and programmatic advertising, each of which we believe has only begun to scratch the surface”.

Porat added that Google saw “tremendous potential ahead” for Google’s ‘other revenue’ businesses, which include its Google Play, hardware and Cloud operations.

Sundar Pichai, Google CEO, gave a bit more color on the performance of YouTube last year – but stopped short at revealing many useful numbers.

“YouTube remains the premier destination for online video globally and is seeing tremendous growth,” he told investors, without adding to the ‘over 1bn active users a month’ stat we’ve seen many times before.

He added: “At the heart of YouTube’s success is its booming community of creators. Every single day, over 1,000 creators reached the milestone of having 1,000 channel subscribers. We are focused on two main areas of investment. First, creating the best video experience that’s fast, personalized, searchable, and that just works.

“We have rolled out many new features to the platform like 360-degree videos, mobile live streams, and support for videos and virtual reality. In regions with limited connectivity, we introduced YouTube Go, which has transparency and control of data usage.

“YouTube remains the premier destination for online video globally and is seeing tremendous growth.”

Sundar Pichai, Google

“Second, we are focused on delivering content that gives fans exactly what they want through offerings like YouTube Music, YouTube Kids and YouTube Red.

“We have 27 originals, pairing some of the most popular YouTube creators with the biggest directors and producers in Hollywood.

“The popularity of this original content has been successful in driving new subscribers and retaining existing ones, and we’ll do more in 2017.”


So what of YouTube’s paid-for subscription tier, YouTube Red?

Questioned by Peter C. Stabler from Wells Fargo Securities LLC in its Q4 earnings call, Google’s team refused to give any hard subscriber numbers.

Ruth Porat pointed out the platform had launched in five countries, while noting: “We’re pleased with the early success and it’s still early days, it takes a while to build a subscription business here.”

Sundar Pichai added: “We are investing a lot in developing this premium [paid-for] experience [across] YouTube… You will see us invest more, more countries, more original content, and we’ll bring together the experiences we have over the course of this year. So it’s even more compelling for users.

“But we are seeing traction with the rate of signups. We’re not disclosing specific numbers, but I’m excited at the progress there.”Music Business Worldwide

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  • jnffarrell1

    It’s worse than that. IP lawyers take most of the profits from artists so the real ratio is more like 300 to one.