How Do YouTube Channels Make Money

How Do YouTube Channels Make Money?

Most people know that popular YouTube channels make money, but it’s not immediately obvious how. And there’s a reason for that: the answer is not simple.

A YouTube channel can earn money in several ways. There’s advertising, of course, but most channels have at least one other source of revenue, and the ones used can vary. Hank Green described this a few years ago.

Here’s a look at those revenue sources, and how much they can potentially bring in.

How Do YouTube Channels Make Money

Advertising: the main source of revenue

YouTube is unique among social networks in that it shares advertising revenue with its users. If your tweets or Facebook posts go viral on a regular basis, you don’t get anything from these sites, but if you build a consistent audience on YouTube, you can expect a reduction in ad revenue generated by your videos.

This is the primary way for most YouTubers to make money, but how much is it? Well, YouTube offers creators 55% of all ad revenue. The actual dollar amount can vary greatly depending on the topic of the video, viewer demographics, and current advertising demand. YouTube CGP Gray described things well in this video:

To summarize, every time you watch a YouTube video, Google sets up an ad auction, matching things like your viewing history and demographic information with the video’s content, then figuring out which advertiser is willing to pay the most to contact you. at that particular time.

Ad rates vary widely based on these factors, but 1,000 views generate, on average, about $2.50. About $1.38 of that goes to the YouTuber, at least according to Gray: YouTube doesn’t release official figures on any of this.

This ad revenue is probably the most reliable income stream for consistent YouTubers, but it’s really only enough to make a living if you consistently get millions of views. Smaller YouTubers need to supplement this to earn a viable salary.

How Do YouTube Channels Make Money

Sponsorships and branding deals

If a channel has a large enough audience, companies will sometimes work directly with it, asking the creator to promote products and brands in the video itself. Sometimes this takes the form of affiliate links for services like Audible, but sometimes a brand will pay a one-time fee to have their product featured in the video itself.

Some YouTubers will simply mention the brand at the beginning or end of the video, making it a bit like an advertisement that is part of the actual video (as opposed to a separate pre-roll managed by YouTube). Others will integrate the product into the content of the video itself, as seen above.

Deals like this are usually negotiated directly between the YouTube channel and the company, so it’s hard to say how much they pay. A Quora thread suggests that the going rate is between $0.03 USD and $0.12 USD per view, which is considerably more than what YouTube’s native ads pay (1,000 views are worth $120 USD at 12 cents per view.) No wonder so many top channels are making these types of videos.

Selling Merch

Selling stuff is the most obvious way for humans to make money, so it stands to reason that YouTube channels would do it. Sometimes it’s a simple item, like a t-shirt or poster, with logos or jokes inside. Sometimes it’s a CD or a book by the creator. The idea is that loyal viewers want to buy something tangible that connects them to the content they enjoy watching. This is probably the easiest way to make money, but again, it only really works if you have a decent sized dedicated audience.

How Do YouTube Channels Make Money

Patreon and other donations

All of the above types of revenue can be very inconsistent, which is why many YouTube channels ask their viewers to contribute directly. Sites like Patreon make it simple for anyone to donate to a given creator each month. The value of having a fixed amount of money each month cannot be overstated: advertising rates change quickly, which can make budgeting difficult. In exchange for this stability, creators often offer access to exclusive videos or merchandise.

Side gigs

You need all sorts of skills to do well on YouTube: like performance, video editing and writing, to name a few. It turns out that these skills are valuable and many people on YouTube use them to supplement their income. It helps if you live in Los Angeles or another media-centric city, as you can audition for roles on TV shows or in commercials.

But no matter where you live, there are local businesses looking for help creating videos or managing social media, and YouTubers can leverage their channel as proof of their expertise. With hard work, it can be enough to create a freelance career in addition to your own YouTube content.

License

It’s relatively rare, but every once in a while, a TV network will approach a YouTuber and ask for permission to use one of their videos. Sometimes this can result in a licensing agreement, in which the TV network pays for the right to use the clip. This is not very common, but it is another potential source of revenue.

It’s not easy money.

You may think the people behind your favorite YouTube channels have it easy, but as you can see, none of this is easy. Building an audience is hard work, and you can’t really access that money until you do. And even having an audience doesn’t guarantee that you’ll make enough to live on in any given month: you have to constantly hustle.

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