Favourite destination

YouTube is far and away the most popular destination on the Internet for viewing video, most of which has been posted by users. Nearly two-thirds of all video views in the United States occur on YouTube, according to the measurement firm Nielsen.

Still, YouTube’s owner, Google, which paid $1.65 billion for the site in October 2006, has struggled to make it profitable.

YouTube was started by three 20-somethings after a late-night dinner party. Its success was based on how easy its software made it for ordinary computer users to upload videos, and the network effect that meant that the more material that was uploaded, the more attractive the site became for viewers, and therefore for others seeking to share content.

It was a formula that drew heavy traffic, but produced little revenue. Critics also said that much of YouTube’s material was posted in violation of copyright restrictions.

Even before its purchase, YouTube had struck accords to license content from two of the four major music conglomerates — the Universal Music Group and Sony BMG Music Entertainment — and the CBS television network in exchange for a percentage of YouTube’s advertising revenue.