How do YouTubers Make Money?

Akshat Sood

People are considered to be extremely lucky if they can earn a living by doing something they love and are passionate about. Some of them are actors, musicians, artists, athletes or just regular people who stumbled onto a video sharing website, uploaded videos of themselves doing stuff they’re good at, went viral and ended up pocketing enough to live a comfortable life. Think: YouTube and YouTubers. But is it really that straightforward? Just making videos and getting a good number of views on them don’t get you any money. So how exactly do YouTubers earn money?

YouTubers can earn money in three ways - advertisements, merchandise and through sponsored content.  

Revenue from advertisements is the main source of income for most YouTubers. Due to the impact of social media, almost all companies have their ads doing rounds before and in-between videos on YouTube. In order to have ads in their videos, YouTubers must monetize their channels, that is, they must have an approved Google AdSense account linked to their channel. Monetization of accounts allows companies to place their ads in and around videos, making these ads visible to viewers accessing YouTube. For every thousand views on the ad, advertising companies offer a certain amount of money, of which 45% is taken by YouTube and the remaining 55% is pocketed by the owner of the channel. The ad rate is around $3 to $5 for every thousand views on the ad. 

But simply getting views on a video does not guarantee that the viewers watched the ad or clicked on it. What if they skipped the ad? Therefore, the ad rate is valid only when a viewer watches either half of the ad or thirty seconds of it, whichever is earlier. So say a video got one million views, but none of the viewers watched the ads in the video, then the YouTuber will earn nothing from that video. All in all, revenue depends on the activity of the viewers and hence channels with a large number of subscribers and viewers are likely to earn more money through advertisements as compared to smaller channels. In 2016, famous Swedish YouTuber PewDiePie made around $10 million from ad revenue.

Several YouTubers have their own merchandise doing rounds in the markets. Logan Paul and Jake Paul, both popular YouTubers, have their own lines of hoodies, t-shirts, mugs, caps and other goodies that are bought by their huge fan followings. 

But, not all subscribers of a channel purchase merchandise. In fact, only about 0.005% to 3% of the average YouTuber’s audience goes ahead and buys merchandise. So to make merchandising cost-effective, one must have an insanely large audience to sell to. For small or upcoming channels, merchandising is not feasible as a source of income, whereas for popular YouTubers, it can yield even more money than what they earn from advertisements.

The third way for YouTubers to earn money is through sponsored content. YouTubers are paid by companies to make videos discussing various products and services offered by the companies.

The amount that companies shell out for such paid product placements depends on the size of the YouTube channel, the demographic and view count. Big channels with north of a million subscribers are paid several thousands of dollars for a specific sponsorship as compared to lesser amounts for channels with fifty thousand to a hundred thousand subscribers. This contrast in pay is due to the significant difference in the number of views a video on a big channel and a small channel will garner.  

Sponsored videos can be of many types – un-boxings, product reviews, or can be subtle mentions of products in videos. For example, Humorously Yours, a web series by TVF endorsed OnePlus devices all throughout the series. 

For a YouTuber with a huge and dedicated fan following, advertisements, merchandising and sponsored content can fetch them a lot of money. PewDiePie, who has the highest number of subscribers on YouTube with almost sixty-two million, is also the highest earning YouTuber, pocketing $15 million in 2016. Roman Atwood and Lilly Singh occupy the second and third positions with their earnings being $8 million and $7.5 million respectively. 

Many YouTubers also go on world tours, with their fans flocking to concerts and gatherings to see their favourite internet celebrities. 

A lot of famous actors and singers began their careers with YouTube. Troye Sivan, an African-Australian singing sensation, started out by uploading covers of songs on his YouTube channel. He gained worldwide attention and released his debut album, Blue Neighbourhood, in 2016. 

Being a famous YouTuber definitely brings in the cash and can transform one's life altogether! Do let us know your views and opinions on such huge earnings by YouTubers, in the comments section below!