my two cents

How to Make Money on YouTube

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Have you ever watched a YouTube star’s video and thought, I could’ve done that? Me neither. Out of all the influencer platforms, YouTube strikes me as the most intimidating. But it can also be the most lucrative, with top YouTubers earning well into the six figures from advertising revenue alone. And this pie is only getting expanding: YouTube recently reported that the number of users earning over $100,000 on the platform has increased by more than 40 percent annually; currently, 75 percent more channels have surpassed a million subscribers versus last year.

Where eyeballs go, money follows. “People giving up TV and getting video content through mobile devices is a huge trend, and brands are spending huge amounts to reach those audiences,” says Evan Asano, the CEO of MediaKix, an influencer marketing agency. “It’s a similar, if not bigger market for influencers than Instagram.” Another reason brands love YouTube is that its numbers are harder to fake. “You can buy views on YouTube, but it’s much more expensive than buying followers and likes on Instagram,” Asano says. “It’s pretty cost-prohibitive to drastically inflate a channel’s views on a consistent basis.”

YouTube also has a more democratic appeal. Unlike Instagram, where the biggest influencers are mainstream megastars in their own right (Selena Gomez, Ariana Grande, Beyoncé), YouTube is dominated by homegrown celebrities, such as Jenna Mourey (a.k.a. Jenna Marbles), Mariand Castrejón Castañeda (a.k.a. Yuya, a Mexican beauty vlogger), and a bunch of gamers that I’ve never heard of but have millions of fans. The world’s highest-paid YouTube star is Daniel Middleton, a British 26-year-old who goes by “DanTDM” and gained his fortune (an estimated annual income of $16.5 million, per Forbes) by posting videos of himself playing Minecraft. Last year, he did an international tour that included four sold-out nights at the Sydney Opera House.

So, how exactly do YouTubers (or “creators,” in the platform’s parlance) make all this money? Most rely on four income streams: advertisers, sponsors, affiliate marketing, and old-fashioned goods and services. (If you’re keeping score, this is one more than Instagram, which doesn’t share ad dollars with creators the same way YouTube does.)

1. Advertising
Until last month, pretty much any random person could enable the “monetization” setting on their YouTube account and get ads on their videos, allowing them to earn a fraction of a cent for every time a person viewed or clicked on their content. That all changed in January, however, when Google (YouTube’s owner) announced new standards to merit those ads. Now, to be accepted into the “YouTube Partner Program” and monetize your channel, you need a minimum of 1,000 subscribers and 4,000 hours of watch-time over the past 12 months; your videos will also be more closely monitored for inappropriate content. Meanwhile, YouTube also promised that members of “Google Preferred” — a vaunted group of popular channels that make up YouTube’s top 5 percent, and command higher ad dollars because of it — will be more carefully vetted. (These shifts followed the Logan Paul controversy, as well as a brouhaha about ads running on unsavory content, such as sexually explicit or extremist videos.)

There was some backlash over these new benchmarks, but frankly, the vast majority of people who lost their monetization privileges weren’t earning much anyway. Most channels make somewhere between $1.50 and $3 per thousand views, depending on their content and audience, and Google won’t even cut a paycheck for under $100 (or roughly 50,000 views — a pretty tall order for the average 14-year-old posting eyeliner tutorials). In other words, if you were looking for an easy side gig, YouTube was never the efficient choice.

Instead, YouTube success takes time and dedication. Kelli Segars, the co-counder of Fitness Blender, a YouTube channel with over 5 million subscribers, spent two years posting new workout videos every week before she and her husband could quit their day jobs in 2010 to focus on the brand full time. Still, without YouTube, Fitness Blender probably wouldn’t exist. “When we first set out to create free online workout videos, we found that most streaming platforms charged so much to host content that we were never going to be able to break into the industry at all, let alone offer free content to our (then nonexistent) audience,” says Segars.

YouTube ads provided a big percentage of the Segarses’ income during those early days, and worked well with their content. “Our workouts require strategically placed water breaks, which easily lends itself to monetization/ads that aren’t intrusive to the user experience,” says Segars. “People even joke about how relieved they are to see ads and get a quick minute to catch their breath.” Meanwhile, that revenue allowed them to adopt a no-sponsor policy. “It has cut out a lot of monetization opportunities, but our audience is well aware of our stance and appreciates it,” Segars continues. “We think that trust is an important part of building a brand.” As a result, they’ve roped in a loyal audience that’s now willing to pay for a variety of workout programs and meal plans for sale on the Fitness Blender website.

2. Sponsorships and affiliate marketing
For other YouTube creators, ad dollars only go so far, and a significant portion of revenue comes from sponsorships and “affiliate marketing” (when brands offer a commission on any sales or traffic that the creator’s content drives). Affiliates function pretty seamlessly through YouTube; anyone can include links to featured products in their video’s caption, and when audience members click through and buy them, that YouTube channel gets a small kickback. Many YouTubers prefer Amazon’s affiliate program, “Amazon associates,” although there are plenty more to choose from.

But sponsorships are where the big bucks are made, and where intermediaries like MediaKix and other agencies come in. This is the major leagues: Most brands aren’t interested in YouTube channels with fewer than 200,000 to 300,000 subscribers or average views of less than 10,000 to 20,000 per video, says Asano. The bar is also high because videos cost more to make, and require tricky negotiations —the sponsor will want to know where their product will be featured, for how long, and so forth. “When we’re connecting top brands with top influencers on YouTube, you’re talking a minimum budget of $50,000 to $100,000, and it just goes up from there,” Asano explains. “Some of the biggest YouTube influencers get paid $100,000 to 200,000 for a single video. And then those videos get millions of views. That’s why there’s a lot of money in the space.”

3. A whole lot of dedication
Of course, influencers have their own interests to look out for, too. “The process of creating a brand campaign is holistic, and the cost is not standard,” says Natalie Alzate, the woman behind NataliesOutlet, a YouTube channel with almost 6 million followers. “My manager, agent, and attorney work hard to ensure that each campaign is a success, which is measured by whether the fans respond to it as well they do to non-sponsored content.”

After all, relatability is a YouTuber’s greatest asset — along with a willingness to keep plugging away. “If you’re passionate about it, you really increase your chances of success,” says Asano. “It’s a lot of work. To produce just one video, you need camera equipment, a computer to edit it on, and time. And if you’re just starting out, you’re not going to get paid for a while because you need to build your subscribers. Don’t do it because you think you’re going to make an easy buck, because it’s not.”

How to Make Money on YouTube in 2018