There's an extraordinary amount of hype around the topic of making money from YouTube. And, by making money, we mean enough to earn a living wage so that you can realize your dreams of working in video production full time. Of course, there are thousands of YouTubers that are making enough to focus on their career full time, but the overwhelming majority of YouTuber users will see very little revenue return. It takes hundreds of thousands of views to see any kind of worthwhile weekly ad revenue income and millions of views to make becoming a full time partner sustainable.
YouTube is expected to attract $5 Billion in advertising revenue this year so how do creators get a piece of the pie? After all, it's their content that's bringing the advertisers to the site in the first place. We take a look at some of the ways you can make money on YouTube how the site is facing a backlash from those who think the business model is broken.
- YouTube's Partner Program
- Advertising Earnings
- Sponsorships & Merchandising
- Paid Subscriptions
- Earnings with Multi-Channel Networks (MCNs)
- Issues with YouTube's Business Model?
Let's start at the beginning with what it takes to become a partner so you can actually monetize your video content.
What Exactly is a YouTube Partner These Days Anyway?
Nowadays, anyone with access to the internet can upload a video to YouTube. However, if you want to make money off that content, you'll need to become a YouTube Partner. So, how do you become a revenue generating YouTube partner? Well, it's pretty easy these days actually.
Once upon a time you could only become a YouTube partner if you applied directly and were approved, or if you received a personal invite from Google. Today however, anyone whose account is in good standing can become a YouTube partner through expressly allowing YouTube to place advertising in, on, and around your video content. Google makes money from the views of these ads and partners can then earn a percentage via a Google Adsense account. Exactly how much money a partner can make varies enormously and depends on a range of different factors.
YouTube states that there are more than a million channels in the Partner Program (up from 30,000 in 2011), with YouTube estimated to take a 45/55 share of the ad revenue. Official figures aren't available but partners only really make a fraction of a cent per view.
To start the process of becoming a partner, go to your 'Account Monetization' page in 'Channel settings' click on the “Enable My Account” button. Once you've been accepted, (which is a really quick process) you're on your way to monetizing your videos.
Be prepared for issues with approval if you are seen to be in violation of any copyright agreements or are publishing material that's deemed abusive, racist or sexually explicit. Google will take down this type of content and your account's good standing may be affected if you continually break the rules.
What Do YouTube Partners Earn From Advertising Revenues?
YouTube takes around a 45% slice of advertising revenue, although the CPM (cost per thousand) that advertisers are charged varies. Most partners earn anywhere between $0.30 to $2.50 CPM, but there are many exceptions to the rule, with some of the bigger YouTube players earning closer to a $10 CPM. Be aware that your location and the type of content that you publish will have a bearing on how much you can potentially earn.
There's a handy little calculator tool that lets you estimate YouTube Partner ad earnings based off of a set number of video views, using the average CPM range mentioned above ($0.30-$2.50CPM). Socialblade is also good if you want to poke around in other's channel statistics and take a look at their very estimated earnings. A recent Reddit thread attracted contributions from all over the world with tales of CPM margins ranging from $0.10 to $6.
Before you get too excited though, remember that creators only get paid if their views are monetized. Many mobile views, those blocked by Adsense, and those where advertising has been switched off for some reason, do not count. 50,000 views doesn't mean that 50,000 of those views were monetized.
The top 1000 channels bring in around $23,000 per month from advertising - but then again, they also average around 900,000 monthly video views, and because they're popular channels, they are likely commanding more generous CPM rates.
$2,500/mo = $2.50 CPM x (1 Million views/1000)
Partner Earnings From Sponsorship/Merchandise Deals
There are a number of popular YouTube creators who have secured lucrative sponsorship deals with brands because these YouTubers have large, relevant, and engaged audiences. And, sometimes, they are just in the right place at the right time, I'm looking at you Grumpy Cat.
Sponsorship agreements are settled outside of YouTube and can take on many forms depending on the deal agreed.
Beyond sponsorships, some YouTubers are so popular that they're able to sell their own merchandise to their viewers. YouTuber Michelle Phan not only signed a high profile deal with cosmetics giant Lancome but also launched her own line of make up products which more than supplement any income she gets from YouTube. Creators, such as Phil deFranco, run their own line of merchandise products and many YouTubers are finding opportunities outside of the site in TV and movie appearances.
$100 to $1,000,000+
Partner Earnings From Paid Channel Subscriptions
In May 2013, after months of speculation, YouTube finally announced a paid channel subscription service which allowed creators and publishers to charge for their video content. 53 channels were launched with monthly fees ranging from $0.99 to $6.99. The new feature, with a 55/45 split in revenue in favor of YouTube was widely regarded as a toe in the water to see whether consumers would be willing to pay for content in the same way they paid for VOD services like Netflix. The new pay per view content model, comes with a 14 day trail and discounts on yearly rates.
Just earlier today - YouTube announced that they are now allowing any monetized partner, with more than 10,000 subscribers, to enable paid subscriptions on their channel.
$1.99 (45% split = $0.90) x 10,000 subscribers = $108,000/year
Increased Earnings with MCNs (Multi-Channel Networks)?
Over the past two years, we've witnessed the rapid rise of YouTube MCN (Multi-Channel Networks) formed in various ways to help support creators and to create more attractive packaged offerings for monetization. MCN's are independent companies (not endorsed by YouTube/Google) who aggregate multiple YouTube channels, and offer assistance to creators in various forms that can include among other things, programming, collaboration, promotion, copyright management, and increased earnings. MCNs are able to offer increased earnings due to the fact that they are often able to command higher advertising rates through direct ad sales, sponsorships, and packaging.
For the average doing-this-outside-the-day-job partner, your earnings from joining an MCN are not going to rock your world. BUT, for a percentage of your ad earnings, MCNs can offer the kind of invaluable support that can help you build up your channel, your subscribers and ultimately, your earnings.
Every Multi-Channel Network have their own rates including fixed CPMs where they pay you a flat rate per 1000 monetized views, or via a contract which gives you a percentage of whatever your channel generates (this can be anywhere upwards of 60%). Machinima offer their content partners a $2 CPM rate which might seem thin, but then they do offer support and legal advice when it comes to copyright issues, a bit problem with gaming videos.
If you're interested in learning more, read our post on the pros and cons of joining a YouTube MCN.
Monetization Issues: Is The YouTube Business Model Broken?
There have been grumblings from some YouTube creators that the revenue model is unfair. Technological challenges had proved an issue for the new pay per view channels and some MCNs are complaining that the rate of return from ad revenue is unsustainable.
Jason Calacanis stirred up quite the heated debate earlier this year with his post titled, "I ain't gonna work on YouTube's farm no more." In it, Jason rants against YouTube's model and calls the 45% share a "YouTube Tax.".
"In a way, YouTube is the Sebastian Shaw of the ecosystem, absorbing all your power and talent and using it for their prime directive: maintain the 45% tax through control of talent, advertisers and user behavior. "
He even created a YouTube 'Bill of Rights' that aims to try and repair the "damage" he sees between YouTube, MCNs, and other content partners.
For smaller scale creators, leaving YouTube is, at the moment, an unthinkable concept. It is, after all, where the audience is. And speaking of audience, 41% of it now comes via mobile, so there are still some huge advertising headaches to sort out where that is concerned.
At our Video Marketing Summit, Jim Louderback led a lively discussion with Greg Jarboe and Paul Colligan, on the current state of YouTube.
It is possible to make a living from YouTube, but as with any creative endeavor, the harder you work, the more optimized your videos are, the greater you are at marketing and collaboration (and the hundreds of other little skills and synchronicities that go into make a project work for you), the more likely you'll be able to generate an income. Creating regular, consistent content (weekly, or even better, daily), sharing it out via others sites and social networks, encouraging engagement, being active on the site, caring what you do is what it's going to take to make you successful.
So, is it worth monetizing your content if you know that you will struggle to reach the views needed, or you find the MCN experience is not for you? Absolutely.
When you become a YouTube Partner through monetization, you're then eligible to use some great YouTube features that are unavailable to non-monetized users, like custom thumbnails, associated website annotations, in-video programming, live streaming, and more. Additionally, if you strike lucky and upload a video that gets a lot of attention there's no way to claw back those potential earnings. Becoming a partner ensures that future views are accounted for, and even if they bring in only a few dollars a year, that's still money that you have earned.