Everyone knows YouTube; some use it to listen to music, some watch tutorials in order to become the next Bruce Lee or surprise friends with new culinary skills, and students use it to procrastinate when exams and deadlines are nearing. If you go on YouTube, scroll down a bit, click on ‘About’ and then on ‘Press’, and you will find a section called ‘Statistics’, which gives you a rough idea of the dimension of YouTube: more than a billion users, which is about a seventh of the world’s population (I don’t know how a user is defined, though). People watch hundreds of millions of hours of video every day, 300 hours of video are uploaded every minute (which is 1,080,000 minutes of video per minute!), and YouTube is present in 75 countries. You don’t need to be an economic genius to identify the platform’s huge potential for making money through, for example, ads. YouTube explicitly states that there a millions of channels earning money and that thousands of them earn in the six figures. Currently, the swedish YouTuber ‘PewDiePie’, who provides comments on video games in his videos, is considered the most successful, with an estimated net worth of $7 million.
But how exactly does that work? I am not a YouTube millionaire nor do I know one, so I haven’t really got first-hand information. I still tried to find enough pieces that at least hint what the puzzle more or less looks like.
In order to make money with your content on YouTube, you need to apply for the so-called YouTube Partner Program. There are several criteria your account has to fulfill to be given approval for the program, and I find those criteria rather vaguely defined. One example for that is the requirement of “original, quality content that is advertiser-friendly”. I couldn’t find any information on how original, quality content is defined.
Once you are a proud partner, you are pretty much good to go, and there are several ways to earn money with your channel, the most important one probably being the placement of ads in your videos. Those ads do not necessarily need to take the form of a short clip before the actual video starts; they can also be placed (for example) under the video screen, which is, however, likely to decrease the cost of the ad and therefore the money you get. There is this general belief that YouTubers get paid per 1,000 views, which is not always the case. The price could also be defined in terms of costs-per-click (CPC) or costs per 1,000 impressions (CPM), which excludes the views where the ad is not placed, e.g. due to an ad-blocker. However, averaging the earnings over thousands of impressions over a certain period of time (RPM) is a good measure of the profitability of the account, and therefore an often used term. An RPM of $5.00 for a given period of time says that you earned five dollars per thousand impressions over that time period on average.
Every video has got its own CPM, making the income stream quite uncertain. Furthermore, YouTube cuts big parts of the gross earnings for an ad, and in order to stay competitive, quite a lot of time and money probably needs to be spent on editing etc. In the end, you have to be lucky enough that people like your stuff, which is quite unpredictable; who would have thought that funny looking cats and testing 100 different beauty products attracts millions of viewers? There are a few people who managed to become rich with their YouTube channels and fuel the hype about making money with videos of every kind.