How Money Is Made On YouTube [MakeUseOf Explains]

youtube-logoUntil a profitable, mutually beneficial alternative arrives, advertisements have to exist in order for us – the consumers – to receive content free of charge. YouTube isn’t evil because it places advertisements at the beginning of videos and throughout the site. If anything, it’s wonderful. Where else can you legally watch terabytes and terabytes of video content that you can’t even completely view in your lifetime for free?

Nowhere.

However, this is only possible through advertising. Someone has to pay to keep the lights on at YouTube, right? Yes, the website is currently experimenting with paid subscription channels, but the truth is that most people don’t want to pay for the company’s product. (And that’s a little bit silly within itself as well.)

To those of you who use AdBlock, you are contributing to a problem. Bypassing the website’s primary source of income is an incredibly selfish move. Allow me to be clear: if everybody used AdBlock, then YouTube would cease to exist.

It’s simple logic, really. If there is no money coming in to pay the website’s staff, hosting, server space, etc., then how in the world could the website even stay up and running? It’s a minor inconvenience, and besides, some advertising is good. Take movie trailers, for instance. How else will you know what’s coming out? Furthermore, are the thirty extra seconds out of your day that big of a deal?

Your favorite YouTubers and companies also have to make a little extra cash to keep doing what they do, and this is collected through advertising money. If famous actors, writers, musicians, and comedians get paid for their careers, than why shouldn’t content creators on YouTube?

With that said, it’s a bit frustrating to see someone who is so addicted to viewing a certain YouTube entity, yet they block advertising. It’s a bit like going to a concert without paying for a ticket. These performers should be paid for their time, dedication, and talent. Even though it may seem like it, they aren’t doing it just for fun.

Maybe it would help if people knew just how money is made on YouTube. Heck, maybe you want to make money on YouTube and want to learn how. Below is a simple understanding of how these content creators (and potentially you) cash in.

How YouTubers Make Money From Ads

rhett

Quick question: what are the most annoying ads on YouTube? Simple answer: the ones that appear within videos. The first thing you should know is that YouTube partners (content creators like Rhett and Link, Freddie Wong, etc.) make money from only these ads. On the other hand, Google – which owns YouTube – makes most of their profit from ads shown elsewhere on the site, like banners and sidebars.

That’s fair enough. After all, it makes sense that the YouTuber’s income is derived from the reason that people are actually on the site, and that’s the video. Good on you, Google.

Moving on down the line, there’s the issue of how payment works. Generally speaking, an ad payout is based on whether or not it has been viewed. However, Google is very tightlipped on just how much its partners earn per view. The major consensus is that YouTubers make less than a penny per ad. So even if a video gets 500,000 hits, the YouTuber would make only $5,000 if it was a penny-per-view. On a surface level, this may seem like a lot of money for just making a YouTube video, and it kind of is. However, in order to be a successful YouTuber, you have to make more than just one video that’s viewed 500,000 times.

It’s possible to make a career from YouTube, but this very dependent on the amount of advertisements shown.

How YouTubers Make Money From Product Placement

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There’s an alternative source of income that YouTubers can receive, and while it is inherently advertising, it’s a bit more subtle. As an ode to the olden days of 1950s daytime television, product placement is a highly profitable source of income for YouTubers. Again, I don’t exactly have the exact numbers, and this is mainly because product placement works on a case-by-case basis.

Consider an extreme sports YouTube channel that involves a bunch of wild and crazy guys doing stunts on motorcycles, jet-skis, you name it. GoPro may work out a deal with this channel where at least one portion of the video is shot on their cameras, and the audience is made aware of this fact. This would likely be done by a message at the beginning of the video: “This clip brought to you by GoPro!”

Is it advertising? Of course. However, it’s less intrusive, it complements the video, and furthermore, it can’t be blocked by AdBlock. Heh. Personally, and this is typically based on the payout, I feel as though this is the best form of income that a YouTuber can find. Furthermore, since the payment comes directly from the company advertising, the YouTube partner receives the full cut.

How YouTube Itself Makes Money

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With the millions of content creators, millions of channels, and millions of videos, YouTube is an advertising cash cow for Google. Since content creators only receive a fraction of a penny per view, this means Google is cashing in on the rest. Furthermore, since sidebar and banner ads go directly to YouTube itself, this is another source of income for the video giant.

That’s a lot of money, kids.

Even still, you may have a chance at making some cash if you can develop quality content. If you’re invited (after making a few quality videos), then there’s your chance to jump in.

Do you make money from YouTube? Have you ever thought about making money from YouTube?

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Comments (18)
  • druv vb

    Nice article. I always wondered how YouTube was still making money when most people just view videos and pay nothing. This explains that. Reading through your article would certainly make one put some videos on the net for some revenue.

    Well, maybe later….

  • null

    As per experience, 500,000 hits won’t give you $5000… I was only given $300 for 400,000 views… Well, my geographic location might also be a factor…Nevertheles, Youtube is one of the best ways to earn online…

  • Onaje Asheber

    Nice!

  • Boris Belov

    Thank for this great article

  • I hate ads

    I’m a proud addblock user! :D

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