YouTube will be profitable in the near future, says Google, which acquired the loss-making video sharing site in 2006 for $1.65bn.
The cost of running the site is estimated to be $711m. This includes bandwidth, content licensing, advertising revenue shares, and hardware storage.
Despite the initially low level of advertising support on YouTube, Google has reported a 300% increase in the past year, according to Reuters.
Eric Schmidt, Google chief executive, said YouTube was on a pleasing trajectory with Google helping marketers to generate adverts for the video sharing service.
Google yesterday reported net income of $1.48bn for the second quarter, an 18% increase compared with the same period a year ago.
In a conference call with analysts afterwards, Google chief financial officer Patrick Pichette said new ad formats have increased YouTube's appeal to advertisers.
"In the not long, too-long-distant future, we actually see a very profitable and good business for us," he said.
Earlier this year, financial analysts estimated YouTube annual losses to be between $174m and $470m.