Morning Joe, 7/25/13, 6:48 AM ET

How YouTube is making huge profits

Fortune's Andy Serwer joins Morning Joe discuss the magazine's latest cover, which looks at YouTube's emergence as the "leading platform for professional artists and producers."

WATCH: YouTube’s rise from cat videos to advertising empire

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What do Justin Bieber, Psy, and the keyboard cat have in common? They all got their start on YouTube.

“Google bought YouTube roughly six years ago for $1.6 billion. It’s worth easily 10 times that much right now. It’s not so much if you’re watching YouTube, it’s how much and what you’re watching,” Fortune’s Andy Serwer explained on Thursday’s Morning Joe.

The site averages one billion unique viewers a month, making Google $3.6 billion, mostly from YouTube’s advertising. YouTube takes a 45% cut of the profit from each ad on a video, Serwer said.

Since ad rates are far cheaper online than on TV, companies see it as a cost-efficient way to reach a larger audience. Advertisers can also target specific demographics on YouTube—something the Mitch McConnell campaign had utilized successfully.

“Marketing people started seeing there was a real value to get millions of people and hundreds of millions to watch on a consistent basis,” Serwer said.

Though it may have its roots in amateur cat videos, original programming, such as Awesomeness TV, has also found success on YouTube. “I will tell you that the stars of YouTube want to be on real TV still,” Serwer said. “So it’s not like they’re killing real TV, it’s complimentary, but it’s starting to change the landscape dramatically.”

For more about how YouTube is changing the media industry, watch the discussion. 

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WATCH: YouTube's rise from cat videos to advertising empire

Updated