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Other than small ads that came a couple years later after youtube's first launch and paid videos to be displayed as featured videos how can a site like youtube that has so many expenses profit? Where does the money come from?

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Who said youtube makes money? – littleadv Dec 13 '12 at 9:54
It doesn't then whats the point? They're spending miilions of dollars every year to lose money? – yoyilbey Dec 13 '12 at 10:02
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Its Google. They have enough to spend. Youtube, to the best of my knowledge, has never been profitable. – littleadv Dec 13 '12 at 10:26
they hold on to it primarily to keep someone else from making something better and making it profitable. They also get a lot of worthwhile data from users of the site – clifgray Dec 16 '12 at 19:46

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how can a site like youtube that has so many expenses profit?

As far as I'm aware, I don't think it is making a profit yet.

Where does the money come from?

Google owns YouTube - and Google are 'quite' well-off, so that's where the money comes from. ;)

They're spending miilions of dollars every year to lose money?

It will make a profit eventually, though even if it doesn't it's most likely a worthwhile investment from Google's point of view. Having control over a resource as large as YouTube is useful from a strategic standpoint.

Think Blu-Ray vs HD DVD. Sony made a loss on every single PS3. Why? Because they wanted to get a blu-ray player into as many homes as possible. That meant the blu-ray 'won' the battle and now Sony are raking it in as a result.

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True but what about people who started youtube and sold to google? How did they make a living til they sold to google? – yoyilbey Dec 13 '12 at 14:23
The wikipedia article (en.wikipedia.org/wiki/YouTube) states that the idea for YouTube was developed in the early months of 2005 and that they had raised $11.5MM in funding by November 2005, so they didn't have to go 'unpaid' for long. They will have started the same way everyone else does - either they work regular jobs and work on the project in their spare time, had sufficient savings to quit their jobs and take the 'plunge' or had supportive families. – Anonymous Dec 13 '12 at 16:11
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Youtube has tons of Ads and has a huge revenue. Not sure the revenue does cover all the cost.

Here is a more recent article on it:

http://techcrunch.com/2011/03/21/citi-google-local-youtube-1-billion/

Here is an article (a bit old) which says its close to be profitable: http://www.neowin.net/news/youtube-still-not-profitable-but-its-close

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