YouTube Explained with Business Model CanvasEstimated Reading Time: just 4 min

The Business Model Canvas (BMC) is the structure of a business plan in one single page.

The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation.

Fundamentally it delivers three things:

Focus: since it is more concise than a traditional business plan
Flexibility: sitting on a single page, it is a lot easier to tweak than a business plan
Transparency: it makes a much easier to understand a business model

This business model design template is based on:

• Customer Segments
• Value Propositions
• Channels
• Customer Relationships
• Key Activities
• Key Resources
• Key Partners
• Revenue Streams
• Cost Structure
• Social & Environmental
• Benefits/Costs

An interesting case study of how to apply the Business Model Canvas is Youtube.

YouTube‌ is a company based in San Bruno, CA.

It is the biggest video-sharing website in the world with more than 400 hours of content uploaded each minute and around one billion hours of content being watched every day.

The initial concept of the company was created by Chad Hurley, Steve Chen, and Jawed Karim (three former PayPal employees) and it was launched in February 2005.

YouTube allows users to upload, view, rate, share, add to favorites, report, comment on videos, and subscribe to other users.

More in dept, referring to the BMC Framework, Youtube business model can be described as follow:

1. Customer Segments: there are 3 groups of people the company is trying to reach

• Internet Users (looking for content to watch/listen)
• Advertisers (looking for users that fall into their Buyer Personas)
• Content Producers (looking for users to watch/listen their content in order to attract advertisers)

These Customer Segments are tightly bonded since the satisfaction of each one of them is strictly related to the satisfaction of the members of the other 2 groups.

Therefore, the groups generate a Multi-sided Market.

Users, Advertisers and Content Producers are segmented based on:

• Demographic Factors
• Psychographic Factors to build Buyer Personas in order to find the right matches and to generate mutual satisfaction.

2. Value Propositions: YouTube developed dedicated Value Propositions for each of the Customer Segments

• Internet Users are provided with a platform for connecting people by distributing content
• Advertisers are provided with a way to connect to a relevant audience
• Content Producers are provided with a stage where they can perform

Anyway, operating in a Multi-sided Market, a harmonization of the Value Propositions is needed.

Therefore, YouTube extensively uses Artificial Intelligence and Big Data Analytics to Cluster its Customer Segments in order to find the right matches and to generate mutual satisfaction.

3. Channels: the way YouTube communicates and delivers its Value Propositions to its Customer Segments is based on Own Channels such as:

• Youtube.com
• Mobile Apps
• Smart TV Apps
• Google Ads

These are fully integrated in order to maximize the possibility to generate mutual satisfaction between the Customer Segments.

4. Customer Relationships: YouTube entertains Digital Relationships with its Customer Segments that are typically established through:

• Review Systems/Sharing Functions that help to select the most popular content and to create communities around it
• Google Analytics where all the data about content are sent and analysed in order to connect Advertisers and Users through
• Content Creators
• Customer Care

Suggestions by YouTube, Review Systems and Sharing Functions helps to create a Viral loop where more and more users are dragged into visiting content.

5. Key Activities: the core activities for YouTube are:

• Platform Development to allow it to generate an increasing mutual satisfaction between the Customer Segments
• Community & Content Management to eliminate inappropriate/offensive content and to ensure the Review Systems work smoothly
• IT Operations to get the complex machine going

6. Key Resources: the key assets for YouTube are:

• Content that is the Value Proposition delivered to users
• Traffic that is generated by good content
• Platforms that make the content available for the users to enjoy
• Recommendation Algorithms that retain traffic by proposing a more interesting content

These digital factors are fundamental to create a relationship with Advertisers and, therefore, to generate revenues.

7. Key Partners: YouTube’s business model works thanks to the relationship the company has with:

• Google that is the owner of the company and provides data/tools such as (Google Ads and Google Analytics)
• Content Creators that, acting as partners/suppliers, generate content and attract the users
• Advertisers that, acting as partners, generate revenues

The partnership YouTube put in place with Content Creators and Advertisers is a sort of Strategic Alliance that aims to cluster Users into Buyer Personas to target them with advertising and to generate revenues.

8. Revenue Streams: revenues are mainly generated by Advertising while YouTube is working hard in finding new ways to generate incomes such as Premium, TV and Music Subscriptions

9. Cost Structure: the main expenses for YouTube are due to:

• IT Operations
• Marketing
• Legal
• Property rights

10. Social & Environmental Benefits/Costs: apparently there are no major Environmental Benefits/Costs related to YouTube Business Model.

When talking about Social Costs it could be good to point out that this business model can affect the time people spend on the phone.

Increasing time spent on the mobile screen is a concern that emerged also from an interview to Apple CEO Tim Cook at BBC where he stated: “I’ve been using my phone and I have to tell you: I thought I was fairly disciplined about this. And I was wrong. When I began to get the data, I found I was spending a lot more time than I should and the number of times I picked up the phone were too many.”