…or should we say, “how they make money off of us on YouTube.”
How we started
Being a YouTuber was once a career to be mocked of, like “Wait, you’re a…YouTuber?” Even for us, two nearly full-time travel YouTubers at this point, we hesitated being YouTubers the first two years of having our YouTube channel. We thought YouTubers were air-headed, superficial and talked 85% of the time about makeup and who’s dating who in celebrity gossip. We didn’t care.
But somewhere in those first two years of trying to forget YouTube existed and instead go the route of travel television, we hit a breaking point. We were spending our time and energy trying to prove to TV networks, agents, producers, production companies that we were worthy just through one audition tape, rather than spending our time and energy on a YouTube channel – a place where we don’t have to listen to anyone; a place where there aren’t any rules, where we work for ourselves, and where we can directly see and adapt to how our audience feels…or not. The more time we spent on YouTube, the more our opinion of YouTube and YouTubers changed.
We no longer thought of YouTubers as air-headed and superficial (okay, there are still a lot of them out there), but we did have a newfound respect. When you think of YouTube as a new medium of entertainment, or the new TV, you gain a lot more respect for the different types of YouTubers and YouTube channels out there. If you don’t like to hear about beauty YouTubers talk about makeup, then don’t watch them, just like you wouldn’t watch Lifetime if you don’t want to watch a suspenseful-romance-family movie. We like travel and we wanted to show people how to do it, to show them to stop fronting and really hear all the excuses they tend to tell themselves as to why they can’t travel (I’m too busy, I’m too broke!)…there’s no one who has a higher authority than us to tell us if what we want to do will work, if the demographic is too big or small, or if we’re too young or old for a certain TV channel. On YouTube, it doesn’t matter.
Regardless of whether or not you watch YouTube, or pay attention to what’s trending on Twitter, or what photos are the most popular on Instagram, committing your career to social media and online video is, in the end, work. Realistically, how do you expect someone to put hours of work, albeit fun work, into something and not get paid? It’s hard for people to see YouTube as a viable career when most people log on to YouTube for fun. Maybe you’re that someone who’s looking to start a career in social media or YouTube? In that case, listen up. Here’s how we realistically make money as YouTubers!
Future = online video
Just on our recent 30-day Eurotrip alone, we ran into three different groups of kids in three different countries who were all about the YouTube life. One group in Berlin who made their teacher stop so they could read a poster saying who’s coming to Berlin for a YouTube festival, one group in Amsterdam who fan-girled and yelled “YouTubers!!!”, and one group in Budapest who wanted a selfie with us even though they had never seen our channel.
…that’s how you can conclude that when kids today are more excited about online personalities than movie stars and TV stars, there will be a shift in demand. Just look at the article, Study Finds 57% of Kids Prefer Mobile Video to TV or this article, YouTube Stars More Popular Than Mainstream Celebs Among U.S. Teens, or just go to any doctor waiting room and see all the kids obsessed with iPads.
How many young people are sitting down watching TV from…do I dare say it…a television? Most have switched over to Netflix by now, and if they’re not watching from a laptop at this point, they’re watching from a smartphone. Let’s say they’re not watching Netflix, they could be watching Vine, Periscope, Meerkat, or YouTube. Twitter and Instagram even have video these days, so what’s going on with this recent explosion of online video content?
Options. It’s 2015 baby, and instead of being forced to choose between FRIENDS and My Wife and Kids because they’re competing in the same Thursday night time slot, online content lets you watch both, back-to-back, with shorter commercials…over and over, on your own schedule. Then, you can even share it with friends on social media so they can do the same.
How it works: the bottom line
Let’s just get one thing out of the way right off the bat: YouTube takes 45% of your revenue, no questions asked. That’s just how it is, and that’s how it is for everyone.
YouTubers do not get paid by how many subscribers they have, nor how many views they have. It’s not like you earn $1 per 1 subscriber. Well, not directly, at least. The more subscribers, views, likes, and engagement you have, the more influence you have over an audience. This is specifically attractive to companies who want popular or influential people to talk about them. Companies reach their viewers through influential people through advertisements on videos or through in-video sponsorships (“I got this shirt from Zara” or “Thanks to the Tourism Board of Wherever, I was able to go see these mountains”). They get promotion, and most importantly, you get paid. Deals can range from free giveaways, to all-expenses-paid trips, to $100, to $10,000. What matters is how large, and how engaged your audience is. Again, these counts will in return land you more ad revenue and sponsorships = more benjamins in your pocket (ahem, after you do your own taxes, which PS, good luck finding an accountant who knows what a YouTuber is).
Ads: spammy, but necessary
YouTubers make money off ads – and there are many types of ads. You have pre-roll ads (those pesky 15 or 30 second ads that run before a video), or in-video pop-up ads like the one picture above, and sometimes really intrusive ads that even interrupt your video half-way and display an ad.
What really matters here for YouTubers is a special little acronym called a CPM (Cost per mille). A CPM is a dollar amount of how much money you’ll make after every 1,000 (mille in Latin) views of the ad on your videos. Who decides your CPM? YouTube does through their ad display network called AdSense. CPMs fluctuate depending on the season. For example, they tend to be higher around Christmas when viewers are more likely to buy, as opposed to a random day in January when most people already feel pretty set. CPMs can literally be all over the place depending on what content you produce and who you reach. It can be less than $1 to more than $10.
Just think, even with a $1 CPM, that means you’d make $10 for 10,000 views on one video. Let’s say you have 50 videos all at 10,000 views. You’ve made more or less $500. Then, think of the fact that your videos stay on your channel and will be watched years from now, and you’re literally making money while you’re sleeping. But of course, CPMs are different depending on the YouTuber and their niche, their reach, their influence, and their market, meaning you have the potential to literally make thousands of dollars off of one popular video, either immediately if it went viral, or over time.
But let’s not get too excited yet, because you have to factor in the fact that a lot of people have ad blockers enabled and most mobile views aren’t monetized (when you watch a YouTube video on your phone, many times an ad doesn’t roll).
What types of ads display on your videos? Well, that’s your choice every time you upload a new video:
Signing with an MCN…or not
Remember when I said YouTube takes 45%? Sometimes a Multi-Channel Network (or MCN), or really to make it more simple, a “talent agency for YouTube,” will contact your YouTube channel asking you to join their network. In exchange for “actively” looking for sponsorships and gigs to make you more money, they’ll give you 70% of your earnings (sometimes more, sometimes less, but this is mostly the average). This means that after the 45% cut YouTube takes, your MCN network, YouTube agency, or however you’d like to refer to them, will then take 30%.
On the bright side, you get access to a music database for your videos, clean-cut graphs of your analytics and earnings, free access to certain apps, and what they tend to claim as most important: a user database, allowing you to pinpoint creators you could potentially collaborate with to grow your channel. If this is all you want, then you should sign with an MCN.
On the not-so-great side, most MCNs promise they’ll “actively” search for sponsorship opportunities, as long as you sign the contract and hand them over the agreed-upon 30% cut of your YouTube earnings. This is risky. We originally signed with our MCN because we were under the impression that with them, our earnings would explode. We would have a whole new set of brands who have been “looking” to work with creators like ourselves and in return, that would allow us to finally be full-time YouTubers. Most of the times, with channels under 50,000 subscribers, this is not the case. MCNs can only employ so many people to run their MCN. With that being said, most of the brand deals, let alone attention, go to the top YouTubers in their network – which is both sucky and logical, since the top YouTubers are the ones making them money, and making them look good. For smaller YouTubers under 50,000 subscribers, they’re left with the MCN databases and access to certain apps as their compensation as being a part of the MCN’s network.
OUR ADVICE: We held off signing with an MCN until we had 2,000 subscribers. Now that a year has passed, we can now say that we would most definitely wait until we had 50,000 subscribers if we were to do it over again. As a smaller YouTuber who is starting out, your earnings will be more important to you than access to more statistics and music databases that YouTube now provides to you for free.
Working with sponsors
Advertisers know that you’ll be able to reach your fans in an authentic way (or let’s hope) and they want to take advantage of that. Working with sponsors is probably the best way to make quick cash, since most sponsorship deals can be completed in a simple tweet, Snapchat, or 3-5 minute video. Yes, you can literally get paid hundreds of dollars to send one tweet or do one Snapchat. Viewers catch on quickly if you’re looking like sell-out, so choosing your sponsorships wisely is highly recommended. Don’t be that person to promote selfie-sticks when you just said you don’t understand why people would ever use such a thing in your last video. If you choose products that you personally use, then your viewers will see it as a genuine recommendation (it should be) instead of an attempt at duping your audience.
[Warby Parker sponsored video]
Sometimes your sponsor will give you a link to track how many of your viewers actually went to their site or product. After the sponsored period is over, their team will look at how well the campaign ran and depending on the campaign, you may either get a cut of the earnings (basically, commission), or be asked to make another video.