The Million Dollar Question: How Much Do YouTubers Really Make?

by: Dustin Hawley | Tuesday December 11, 2018

YouTube is a mecca of sorts. The popular video sharing site is a place for viewers to find entertainment, education, and for a lucky few, a lucrative career. YouTube certainly has a huge global audience, with over 1.5 billion users, making it the second-most visited online search engine in the world after Google. In today's fast-paced digital world, many people browse online forums and see all the brand deals and perceived wealth their favorite YouTubers are acquiring through their video content. Still, there are plenty of skeptical people in this world who do not believe it's possible to make good money on the Internet. In reality, there are a number of success stories of people who have made their fortune online, specifically YouTube.

But the question on most people's minds is "How much money do YouTubers really make?" While that answer is complex in nature, with a number of variables and layers, the fundamental answer may come as a surprise to many. While YouTube is a viable career for a blessed few, the odds of making a good living (or even a meager living at that) are far more difficult than you may imagine. Making money on YouTube is an arduous process that takes nurturing, intrepid dedication, and a little bit of luck. 

Monetizing your channel is the first hurdle one must overcome on their way to bringing home the bacon. So the first question is how do YouTube creators make money? There are 4 primary ways YouTubers make their money. 

1. Advertising Revenue

Here are the numbers. Content creators on YouTube earn somewhere between $3 and $10 for every 1,000 viewer engagements. This is the most common revenue model used on the social media site and the primary source of revenue for YouTubers content. Essentially, YouTube pays the video owner 55% of any ad revenue collected on the video page. So creators focus on leveraging their content with the advertising angle top of mind. Plain and simple, if you can reach 10,000 viewers and get them to connect with you on YouTube, you're looking at a $300 payday, minimum.

YouTube creators primarily earn their ad cash through YouTube AdSense partnership programs. Ads are embedded on a YouTube channel page that (hopefully) generates revenue from channel viewership. If there are ad dollars to share, YouTube grabs 45% and you, the channel producer, earn 55% as your commission.

There is no consistently accurate way to estimate what you'll earn as a YouTube partner, as experiences on the site differ. For example, a small ad placed on a YouTube channel in a small town in a place like Chile will likely pay out less than a huge advertisement placed by a company like Ford Motors in Chicago or San Francisco. These variances can be vast, making it difficult to predict future ad earnings on YouTube.

2. Corporate Sponsorships

It's no secret that companies love to attract viewership to their brands, products, and services. For obvious reasons. Therefore, many businesses sponsor influencers to create YouTube videos that promote their products and compensate them accordingly. Creators seeking YouTube sponsorships do face obstacles, however. For example, companies typically only want to work with influencers who have a large audience. Creators new to YouTube likely won't qualify for sponsorships until their videos start attracting 10,000 or more user engagements, which is certainly no easy task.

3. Merchandise Sales

Some creators earn money selling shirts, hats, gadgets, knick-knacks and even gift cards to their viewers on YouTube. But selling merchandise as a creator on YouTube does not happen overnight. Typically, it takes years to build a following large enough to generate profitable revenue from merchandise sales.

4. Fan Donations

Many creators finance their operations by having viewers donate funds to their video channels. This is another challenging angle because viewers are hesitant to part with their money unless they are wildly passionate or your content is thoroughly entertaining. This is not to say that acquiring fan donations is all but impossible. However, typically one must have the kind of fully-engaged audience that are enthusiastic about contributing to their creator in order to make it easier to earn a substantial income through advertising or sponsorships.

How does the payment process work?

This is where things get complex. So let's start with the percentages. Google pays out 68% of their AdSense revenue. What that means is for every $100 an advertiser pays, Google pays $68 to the publisher. The actual rates an advertiser pays varies, usually somewhere between $0.10 to $0.30 per view, but averages out to $0.18 per view. So on average, the YouTube channel can receive about $18 for every 1,000 ad views.

It should be noted that there are no terms under the partner agreement with YouTube about exactly how much you will be earn per 1000 views. On average, you earn about $1 for every 1000 views. Why is that? Well, here's the kicker. Advertisers only pay creators when someone clicks an ad while playing the video, or they watch the video 5 or 30 seconds. What this translates to is, even if your video gets millions of views but nobody clicks on the ad, then you don't make a cent. The reality of how much money most YouTubers make is not nearly as glamorous as many would assume.

Research done by Bärtl reports that — assuming the income equals $1 per 1,000 views — a YouTuber who makes it to the top 3% most-viewed channels will barely surpass the U.S. federal poverty line of $12,140 for a single person. There are YouTube celebrities the likes of Pewdiepie who enjoy nearly 76 million subscribers.  His predicted net worth at the beginning of 2018 was $61 million, according to Coed. They estimate that he has cleared at least $15.5 million a year from advertising earnings on his YouTube channel. But he is very much an exceptional case and not a model that can easily be replicated. 

Nevertheless, there are certainly other success stories aside from Pewdiepie that demonstrate the potential of monetizing your content. Olga Kay, a highly successful YouTuber with over 800k subscribers, recently revealed in the New York Times that she earned $100k -$130k from YouTube annually over the past three years. If you break down those numbers, that's $8,300 - $10,800 per month, which for most people would be a robust salary. Kay has said that her secret to success is making videos that are highly appealing to viewers.

It's simple, really. If you post catchy content, you can get active YouTube subscribers and more views, likes, shares, etc. And while this idea is simple in nature, it's certainly easier said than done. Regardless, it goes without saying that creators need to optimize their channel to rank high in YouTube, which is a core element to improving your visibility on the platform. At the end of the day, as is the case in many aspects of life, your revenue potential is directly tied to your abilities and your work ethic. The amount of money you make on YouTube greatly depends on your efforts to publicize and grow your channel.

Here are some of this year's Top Earners on YouTube 

Despite the inherent difficulties that come with trying to make money on YouTube, there are enough success stories on the site to keep plugging away, with the opportunity to make millions, too. These top earners are living proof that you can make it big on YouTube.

No. 1: Ryan ToysReview

It's hard to fathom that this YouTube channel is run by a six-year-old. That wasn't a typo, a six-year-old boy runs this massively successful channel. His name is Ryan, and he simply reviews toys on a regular basis, which has earned him more than $22 million this year.

No. 2: Jake Paul

The boisterous younger brother of disgraced Logan (who came in this year as the 10th highest earner on YouTube) had the best year of his career from his thriving merchandise business. He garnered more than 3.5 billion views of his rap songs and goofy pranks over the Forbes scoring period.

No. 9: Felix Kjellberg, AKA PewDiePie 

The 'business model' for making millions while playing video games and talking about those games on YouTube was a template all but pioneered by PewDiePie. He is the quintessential YouTube megastar and has a staggering 75.8 million subscribers. He has regularly been the top YouTube earner over the past decade until being recently dethroned. Despite the backlash he received last year after a slew of anti-Semitic videos, advertisers have finally returned. It's rumored that brands are shelling out up to $450,000 for a sponsored video from Pewdiepie, a clear indication of the power that having a massive online audience has on garnering promotional appeal from brands. He has made $15.5 million dollars this year.

No. 10: Logan Paul 

YouTube superstar Logan Paul has made $11.5 million by rolling out comedy views, video blogs, and music videos, amassing 18.6 million subscribers to date. He was recently under public scrutiny over a video he shot that showed the hanging body of a man who had recently killed himself in Japan's 'suicide forest'. He also fought fellow influencer KSI to a draw in a pay-per-view boxing match. Despite the controversy that surrounded him in 2018, he still had an amazing year financially, though he has said that the negative publicity has likely cost him more than $5 million dollars in advertising and brand partnership deals that were terminated due to the bad publicity around the controversy.

Don't let the success blind you...being a YouTube celebrity isn't for everyone.

In closing, there are many challenges to converting your passion for content creation into a sustainable, lucrative career. It should be re-emphasized that the examples listed throughout this article are the exception to the rule per se, and are the torch bearers for a relatively young but rapidly expanding industry. Don't let the glitz and the glam of perceived celebrity deter you from the harsh reality of YouTube stardom. It is a difficult mountain to climb, one where only an extremely small percentage of creators ever reach the summit. Which is not to say that you shouldn't pursue your passions to be a creator if that's what's in your heart. But now that you know how much YouTubers really make, you can make a more educated decision on if it's a career path for you. 

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