"How much can the most popular YouTube video earn?"

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A globally popular children's song, "Baby Shark Dance," has amassed over 16.4 billion views, making it the most-watched video in YouTube history. However, the Korean company behind it, Pinkfong, has not become exceedingly wealthy as a result.

Today, this predicament has reached a critical juncture. On Tuesday, Pinkfong officially went public on South Korea's Kosdaq market, with a share price set at 38,000 won per share (about $26), valuing the company at roughly $375 million. This IPO marks the company’s entry into the capital markets after shelving its 2019 listing plans due to disagreements over valuation with investors.

Despite its phenomenal online popularity, Pinkfong's financial performance has been relatively modest. Last year, the company’s revenue was about $67 million. This IPO is expected to raise nearly $50 million in capital (excluding costs), which will be used for future content expansion plans.

The core reason for the company's limited profitability lies in strict advertising regulations for content "made for children". In 2020, YouTube tightened its policies to comply with the US Children's Online Privacy Protection Act, prohibiting personalized advertising on children's content. This directly weakened creators’ ability to monetize and explains why Pinkfong, despite top global traffic, still needs to "raise funds" through an IPO.

King of Traffic, Profitable Dilemma

Since its upload in 2016, "Baby Shark Dance" has averaged more than 4.7 million views per day. Its total view count is roughly equivalent to the combined sum of Taylor Swift’s ten most popular videos on YouTube. This catchy hit officially surpassed Luis Fonsi’s "Despacito" in 2020 to become the most-viewed video on YouTube, and its lead continues to widen.

The massive traffic comes from all over the world. The song has been released in 25 different languages. The United States is the largest market for views, while Brazil contributes the most "likes." However, this astounding traffic has not completely translated into equivalent revenue. Last year, Pinkfong’s revenue was about $67 million, with an operating profit of around $13 million. The majority of its income comes from content sales (including YouTube and other platforms), while licensing and merchandising contribute relatively little.

Pinkfong’s monetization challenges mainly stem from YouTube's regulatory policies for children's content. In 2019, after YouTube reached a settlement with the US Federal Trade Commission to comply with the Children’s Online Privacy Protection Act, stricter content restrictions were implemented globally in 2020.

The new rules explicitly ban personalized ads on videos marked as "made for kids" and have disabled features like comments and subscriber notifications that help boost user engagement. This policy has caused the profitability of many children’s content creators to plummet. For creators who rely on ad revenue, this is tantamount to a "tightening spell."

IPO for Survival After Shrinking Valuation

The impact of regulation is direct and substantial. Garrett Johnson from Boston University analyzed the impact of the 2019 settlement on online children’s content and estimated that without these stricter restrictions, "Baby Shark" could have generated two to three times more direct revenue for Pinkfong.

In fact, as early as 2019, Pinkfong had considered going public, but the plan fell through due to disagreements over valuation between the company and investors.

Now, with its IPO at a valuation of about $375 million, the company aims to seek financial support for future development. Through this IPO, Pinkfong plans to raise nearly $50 million to create new content, with a goal of producing three new works by 2028. This shows that, faced with the current limitations in monetizing its existing IP, the company hopes to seek growth by developing a new content matrix.

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