How Does YouTube Make Money?
When it comes to video-sharing platforms, YouTube is the biggest platform of them all. Launched in 2005, it has grown exponentially to become the second most visited website globally, with over 2 billion monthly active users. With all these people spending a significant portion of their day consuming content, it’s no surprise that some people want to know how YouTube makes money.
Why People Want to Know How YouTube Makes Money
While YouTube’s popularity is undeniable, the way it makes money is not that clear. Viewers get to watch a variety of content for free, but there’s always the question of who pays for it. Many people are curious about the secret behind the video-sharing platform’s revenue model, specifically which revenue streams generate profits.
In this article, we will delve into YouTube’s revenue model and explore how it’s possible for creators to make money on the platform. From advertising to merchandise, we’ll explain the various revenue streams that keep YouTube profitable and make it an attractive platform for aspiring YouTubers looking to monetize their content.
Advertising
Advertising is the primary revenue generator for YouTube. It’s a simple process: content creators upload videos to YouTube, and ads are displayed on their content. Advertisers pay YouTube to display their ads, and YouTube splits the advertising revenue with the content creators who display the ads.
The revenue split for advertising depends on the type of ad served. For example, skippable ads are those that the viewer can skip after watching for a few seconds. The revenue from these ads is shared according to the number of clicks the ad receives. Non-skippable ads that play before or during a video are those that the viewer can’t skip and pay a higher revenue return. The content creator gets a percentage of the revenue shared by the views/ clicks earned by these ads.
YouTube also offers content creators the opportunity to monetize their videos by placing ads on them using the YouTube Partner Program (YPP). YPP is a program that rewards creators for creating engaging content and has more than 20,000 partners worldwide. Various factors determine whether a creator can become a partner. Still, the primary requirement is that they have a minimum of 1,000 subscribers and 4,000 watch hours.
YouTube Premium
YouTube Premium is a paid subscription service that gives users access to ad-free content. Subscribers of this service pay a monthly fee, which is shared between YouTube and the video creators. This revenue model helps creators earn more money from their premium content.
In addition to an ad-free viewing experience, YouTube Premium also offers exclusive content to its subscribers. This content is produced by well-known YouTubers, which appeals to a particular audience. The platform also offers a free trial period. The subscription fee varies by country, but a standard rate is $11.99 in the US.
Channel Memberships
Channel memberships are another way in which creators can earn money from their YouTube channels. This feature offers fans the opportunity to pay a monthly fee to support their favourite YouTubers. In return, subscribers receive exclusive content, custom badges, and special access to their creators.
Creators can set their subscription fees for the channel memberships, which can start at $4.99. The revenue generated from this feature is shared between YouTube and the content creator, with the creator receiving anywhere between 60% and 70% of the membership fee, depending on the country of the subscriber.
Super Chat
Super Chat was introduced in 2017 and is a feature that fans can use to highlight their comments during a live stream. Fans who want to show their support to the creator can pay to have their message displayed in the chat. The more they pay, the longer their message is displayed. The revenue generated by Super Chat is shared between YouTube and the content creator, with the creator receiving 70% of the revenue.
YouTube TV
YouTube TV is a subscription-based service that allows users to watch live TV channels, including premium channels. It operates similarly to regular cable or satellite service companies and costs $64.99 per month. Revenue generated by YouTube TV is shared between YouTube and the content provider for the channels available on the platform.
YouTube Red Originals
YouTube Red Originals is YouTube’s original content produced in partnership with established creators. This service started in 2015 and was rebranded as YouTube Premium in 2018. With YouTube Red Originals, YouTube pays the content creators who produce the content directly.
The process of producing content is expensive, but it’s also a lucrative revenue stream for YouTube as it ensures that high-quality content is available on the platform for viewers to enjoy. The revenue generated by YouTube Red Originals is shared between YouTube and the content creator.
Merchandise
Merchandising is another revenue stream that is open to creators on YouTube. It involves selling various branded items on the platform. By partnering with print-on-demand companies, such as Teespring and Spreadshirt, YouTubers can create and sell branded merchandise without having to handle the design or shipment process. This approach is simple and cost-effective for creators. Merchandising allows creators to monetize their channels by promoting their branded items in their videos and linking to their merchandise store in the video description.
Conclusion
In conclusion, YouTube has various ways of making money for itself and its creators. Advertising, YouTube Premium, channel memberships, Super Chat, YouTube TV, YouTube Red Originals, and merchandise are all revenue streams for creators. YouTube has become an excellent place for creators to share their content and turn it into income. However, it requires creators to create valuable content to attract and retain an audience.
If you’re a content creator looking to monetize your channel effectively, it’s essential to have a plan that incorporates various revenue streams to maximize your earning potential. Knowing exactly how YouTube makes money is an essential step towards achieving that goal.