How YouTubers Generate Income: What is the Reality?

JennaMarbles (real name Jenna Mourey) has accrued over 14 million subscribers on the video sharing site YouTube in the last 4 years that she has been a member.  In the above video that she posted commenting on the unfortunate state of her house, Jenna mentioned that she does not make sums of money as large as some of her viewers seem to think that she does. She mentioned cutting herself a paycheck and addressed that there are misconceptions about how much money those who produce videos on YouTube generate. Note: I suggest watching from about 2:52 to 3:27 to hear her specific comments on the topic.

This sort of talk got me thinking about how YouTubers (YouTube personalities) make money, how they do it, how sustainable it is, and if it is really as glamorous as it appears on the Internet.

Have you ever wanted to be on YouTube? Even a little? You might be wondering to yourself, How can I make bank on YouTube?

What kind of YouTuber should I be in order to be more successful?

Through reading a countdown of the 20 “richest” YouTube personalities from Business Insider, I summarized the content to myself as the following:

According to descriptions provided in the list,

  • numbers 3 and 2 focus more on children’s toys, ranging from reviews to assembly
  • numbers 18, 12, 11, 10, 9, 7, 4, and 1 are considered in large part comedic YouTubers
  • numbers 20, 19, 18, 16, 15, 14, 13, 11, 8, 6, 5, and 1 are considered in large part gaming YouTubers

The lesson I learned from this is that there is big money and popularity in the gaming industry for YouTubers.  Should I force myself to buy an Xbox now?

In the introductory paragraphs of the post, the author basically wrote a disclaimer on the legitimacy of the information. Provided by the YouTube analytics company SocialBlade, the numbers indicate that YouTubers on the list “could each be earning more than $1 million a year in ad revenue [italics added].” The site assumes that every video is monetized and that the CPM rate is somewhere between $0.60 and $5. CPM is the cost per thousand impressions.  If a company pays a CPM rate of $0.60 on YouTube that means that the company pays Google $0.60 for every 1,000 times their ad is displayed to a YouTube visitor. Google then pays the YouTuber that money after keeping a considerable 45 percent.  Problems with these assumptions? SocialBlade is guessing CPM rates, even though the rates for certain types of ads are likely very different from case to case. Yes, these estimations are interesting. But accurate? It estimates that TheFineBros’ annual income is anywhere from $239,000 to $2.41 million. What kind of range is that?

Want to get first-hand experience making money on YouTube? Here’s how.

The YouTube Partner Program

The YouTube Partner Program allows YouTubers to monetize, or earn money off of, their videos and content.  Through the program, YouTubers can monetize with advertisements, merchandise, and paid subscriptions.  Because Google owns YouTube, this all basically means that Google will host you as a creator, and as a host looks to profit from the popularity you gain on YouTube.  You can look here for a ton of links where Google will walk you through the process of becoming a Youtube Partner.

How do I get ads on my videos?

To begin to monetize your videos the simplest way, by putting ads on them, become a YouTube Partner and get an affiliated AdSense account (both through Google).  Google handles ad placement, or which ads from which companies are put on your videos.  It keeps track of how many people see/click on the ads, and pays you accordingly, so the only company you do direct business with is Google.  Basically, to be eligible for your videos to make money from ads, you must:

  • Have a YouTube channel
  • Follow YouTube’s Terms of Service and Community Guidelines when creating your videos
  • Have all original content

This last point probably starts to make you wonder about YouTube Channels such as RayWilliamJohnson or Cimorelli. RayWilliamJohnson features clips from videos posted by other people on the Internet, but gives commentary of the content and only uses small amounts of non-original footage while suggesting that viewers click on links to watch the originals. For these reasons, the videos are considered “fair use.” Those who create them have supplied enough of their own content to make the videos different in quality from the originals, which is why you still see ads appearing in said videos.  And while we’re on the topic, fair use is not always cut and dry. If someone accuses a YouTuber of violating copyright on his/her content, and the YouTuber denies the accusation, there are steps and legal actions one can take to dispute the claim and defend their content.  Cimorelli, while the members sing many covers, generally make their own (although usually slight) artistic alterations to the songs they cover. Additionally, there is a category of “eligible cover videos” which are allowed to generate revenue on YouTube after the original songs have been claimed by their producers.

Types of ads

These are the types of ads that YouTube allows you to choose from to display in your videos.

  • Overlay in-video ads: Ads that pop up at the bottom of the video while a viewer is watching, which they can decide to close/hide so that it does not impede their view of the video.
  • TrueView in-stream ads: Video ads which allow the viewer to skip to the intended video after 5 seconds. Advertisers are only charged for these ads if a viewer watches 30 seconds of the ad or watches the ad until the end. These generally have a higher CPM rate.
  • Non-skippable in-stream ads: Ads that automatically play out in their entirety which viewers cannot skip. Most often these appear at the beginning of videos, and do not allow the viewer to watch the video he/she intended to watch until the video ad reaches its end, but can also appear somewhere in the middle or even at the end of the video. These ads are tricky, because, while they have higher CPM rates, the presence of these ads can reduce traffic, which is bad for the YouTuber. Who hasn’t gotten annoyed at being forced to watch an ad about Verizon when all I—Um, I mean they—want to do is watch hilarious cat Vines? They may not want to stick around if long ads clutter up a playlist of carefully selected animal footage.

There are some basic pros and cons that I see to the YouTube Partner Program.  Pros: Google handles everything after you choose to monetize your videos, and automatically matches ads with your videos based on your video tags and description so that they are most relevant to what your viewers want to see.  Cons: Google decides what ad content is put on your videos and takes 45% of your revenue. Keep in mind that, in a way, even though you are a content creator, you are not letting Google in on your business; Google is letting you in on its business.

Additional things that sites such as SocialBlade do not take into account when trying to rank YouTube personalities financially is merchandising and paid product placements. While ads can help a YouTuber generate some income, his/her popularity is more of a springboard to getting money from product placement and then selling services and merchandise not exclusively through YouTube. “Diversifying,” making money through multiple pathways, is what can make YouTube into a full-time job, as well as generate a full-time income.

Sponsorships

When talking about paid product placements on YouTube, other terms such as “sponsorships,” “brand deals,” and “brand integration” may get thrown around as well, but these are all related to the same basic concept: a YouTuber gets funding from a company in exchange for promoting that company’s product(s) or brand.  With this funding, a YouTuber can continue to fuel production costs, sometimes for videos that might otherwise be too expensive. In one ZEFR post, the author claimed that YouTube Channels are recommended to charge a CPM rate between $75 and $100.

Merchandise

YouTube provides YouTube Partners with the option of “merch annotations.”  These allow you to annotate links to your merchandise within your videos even though the links lead to a non-YouTube site. Common merchandise would be t-shirts, hats, and backpacks.  However, you can only link to a group of approved retailers, such as District Lines and Cafepress, if you use annotations. Using merch annotations is a good way to make sure your viewers see the link to your products (because, so often, we completely skip reading the description box). Selling merchandise is another way to make money once your popularity has started on YouTube, and the videos allow you to advertise yourself.

Hard Truths About Being a YouTuber

In the YouTube video titled The Truth About YouTubers, its creator, IISuperwomanII,  teaches us some hard truths about the lives of YouTubers. Part of the wisdom she dishes out pertains to how YouTubers get revenue. In summary: YouTubers make money from ads on their videos, and make more money if viewers click on the ads. YouTubers also make money from brand deals, live performances, and merchandise. And an extra fun fact for those considering making money through the site is that YouTube can take over your life if it is your career. Thanks, IISuperwomanII.

Once again, a YouTube video got me thinking.  Based on what I find on the Internet about being a YouTuber, it’s not necessarily easy to do (which IISuperwomanII articulates quite well). But the difficulty in making YouTube videos varies from person to person, as situations differ. Similarly, income varies for YouTubers. Yes, if someone is very popular on YouTube and gets a lot of video views, that person probably makes more money than those with fewer views. More traffic means that more ads are viewed and more consumers are willing to pay extra for their favorite YouTubers that they watch every day. Take me, for example. I am sorely tempted to purchase an $18 “GET LEGS” t-shirt.

Unfortunately, it is difficult to determine, maybe even impossible, how much any one YouTuber actually makes, unless he/she decides to tell us. We can compare YouTubers, but if you reference the list from Business Insider toward the top of this post, notice that there is a wide range in the income estimates for each YouTuber.  If that wasn’t enough, if your YouTube videos are more ambitious than your everyday vlog about your favorite gymnasts, then you could be looking at production costs in the thousands of dollars per video.  Subtract whatever these productions costs are from the revenue you get (after Google’s 45 percent cut of the money from ads) and we have a profit value that is probably not as high as originally expected.

This all makes me wonder about the future of YouTube, its community, its creators, and its content. YouTube content has branched off into many different areas of interest for viewers since its creation in 2005, ranging from gaming and AMVs to beauty and advice. The YouTube culture has greatly evolved and diversified, and the motivations for people to become YouTubers have done the same. What do you think will be the future of YouTube? What are your views on YouTube as a career? “Let me know in the comments down below, and I’ll see you next time.”

Natalie Tran from the channel communitychannel (https://www.youtube.com/channel/UCKHi7M_11VJmLZSq4WNHSkg) in a screenshot from as early as 2011.   Photo from: http://verymisscoca.files.wordpress.com/2010/03/natalie-tran_youtube.jpg

Natalie Tran from the channel communitychannel (https://www.youtube.com/channel/UCKHi7M_11VJmLZSq4WNHSkg) in a screenshot from as early as 2011.
Photo from: http://verymisscoca.files.wordpress.com/2010/03/natalie-tran_youtube.jpg

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3 thoughts on “How YouTubers Generate Income: What is the Reality?

  1. johnsona2014 says:

    I always wondered how much money people made from putting up a duplicate video of a popular video. The answer is none through advertising, since the videos must contain completely original content in order to have ads. This post has shown us that there are some legitimate ways to make a lot of money through YouTube, but that it is not as easy and straightforward as it may seem.

    Like

  2. zukindr says:

    I feel a little guilty now. I downloaded add blocker so that I wouldn’t have to wait through adds on these videos. I thought add blocker only had a positive externalities, but it actually has a much greater negative externality on the people making a living through these videos. Maybe I’ll remove add block… maybe.

    Like

    • I totally understand that feeling. It’s a little complicated, because while I want to support YouTubers I don’t feel very honest watching an ad for cars when I have no intention of buying one for quite some time, and those companies advertising their products end up paying when I watch the entire ad or merely 30 seconds of their ad (this is in reference to TrueView in-stream ads).

      Like

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