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The most popular site for online video marks ten extraordinary years

|SAN FRANCISCO

ON APRIL 23rd 2005 the founders of YouTube uploaded an amateurish video of themselves at the zoo, standing in front of elephants. Few viewing it at the time would have guessed the grainy, 18-second video foreshadowed YouTube’s rise to become a jumbo-sized force in its own right. Today a billion people, or around a third of all internet-users, visit YouTube every day. Each minute, they upload more than 300 hours of video to the site. After Google and Facebook, YouTube is the third most popular web domain globally.

Its size is not the only sign that YouTube has grown up. In its early years, YouTube played host mainly to homemade videos and pirated television shows that consumers uploaded themselves. Had Google not bought YouTube in 2006 for $1.7 billion, YouTube might not have survived the barrage of lawsuits it faced from production companies angry that their valuable shows were being put online illegally.

Under Google’s ownership, YouTube cleaned up its act. Television companies start to upload clips of their own shows themselves as teasers. And musicians made their music videos easily watchable online, displacing MTV, a cable channel with similar content. Over time, YouTube has started to woo over advertisers, who can now worry less about placing their commercials next to off-colour or illegally-sourced clips.

Through every stage of growth, YouTube has been a major force of disruption. For example, people used to turn to self-help books to learn how to fix their cars or cook meals, but they now turn to YouTube for answers to such questions. Entertainment has also been transformed. Along with Netflix, YouTube has helped change consumers’ expectations about video content, by making it easily searchable and available on demand. Its breadth, depth and instantaneous organisation have been as culturally transformative as Denis Diderot’s encyclopedia was in the 18th century, but with an even wider reach.

In recent years YouTube has become even more ambitious, trying to disrupt the television business. It has invested millions in bringing higher-quality shows online and marketing individual “channels”. A new generation of stars has risen on YouTube, known worldwide to their legions of (mostly teenage) fans. For example, PewDieDie, a Swedish gamer who records his reactions while he plays video games, and has been watched billions of times.

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When it comes to disrupting television, YouTube’s record is more mixed than any of Google's executives care to admit. It has had little success selling consumers subscriptions to its “channels”, even at very low prices. So far YouTube’s cultural relevance and ubiquity have outshone its commercial success. At least one analyst questions whether YouTube is even profitable, taking into account the high cost of bandwidth in markets like Africa. (Google does not break out YouTube’s earnings for inspection.) EMarketer, a research firm, reckons that Google will only post around $1.6 billion in video revenues this year in America, where the television sector takes in revenues of around $150 billion, including advertising and subscription fees.

On the other hand, YouTube is only ten years old, and has plenty of room to grow. But it will face plenty of competition in the years ahead. Facebook in particular has its eye on online-video advertising, and Yahoo and other firms are trying to create their own online video platforms. None is likely to have the reach of YouTube.

Many analysts balked at YouTube’s price tag of $1.7 billion when Google purchased it as a sapling. Today it has grown into a giant. That may serve as a reminder of how valuations that are considered high at the time of purchase can end up seeming cheap in retrospect, after platforms win out over competitors. This is certainly true for Facebook’s purchase of Instagram, a photo-sharing website, for $1 billion in 2012. Back then Facebook too received criticism for overpaying.

Yet it is unlikely that YouTube could have become what it did without Google’s clout, capital and popularity. YouTube’s biggest lesson to others, at the age of ten, may be a strikingly obvious one for anyone who knows what it means to be ten years old. Sometimes finding a gifted parent is the best determinant of success.