This is the first in a series of articles about YouTube. Now that almost everyone is able to monetize their videos, one question that keeps coming up is ‘how much can I make from this gig’? Assuming I am good at making entertaining videos, is this something that can make me rich? Can I at least quit my day job and make videos full-time?
If you want the most up-to-date statistics, you should visit SocialBlades Top YouTubers chart and start clicking on some of the names. Here is a sample of some of the more prominent YouTubers.
Annual Income from Monetization of Some Leading YouTubers (Statistics for Social Blade, accessed on 21 May 2014)
Annual Income: Low Estimate
Annual Income: High Estimate
ERB (Epic Rap Battles in History)
According to SocialBlade’s statistics, the most viewed channel of the past year—PewDiePie—is estimated to have raked in an annual income of between 2.1 million and 17 million dollars (accessed May November 2014). The true figure would likely be towards the bottom of that range as only a relatively small number of people click on ads. If you are looking for the estimated revenue of a particular channel, you can search for that channel’s data on the Social Blade site.
Form this data, we can assume that several of the top channels are now bringing in over a million dollars a year via advertising revenue (but these would only be the channels at the very top)
In this article, we will take a look at how much the stars are making, where some of their revenue is going (e.g., to networks) and whether the top YouTubers deserve such high incomes.
How Much Do the Top YouTube Earners Make?
OK, so you want to be a YouTube star. Is it worth it?
Everybody is keeping their cards close to the vest on this topic (YouTube does not allow partners to publicly disclose revenue figures), but if you are extremely successful (the ‘extremely’ part is important!), you can make enough to live fairly comfortably with your YouTube work being your full-time job.
The top earning channels at present are certainly bringing in six figures from advertising revenue annually (before taxes) with the channels at the very top earning at least a million dollars per year. According to the Social Blade website (Social Blade, accessed May 2013), the top earning YouTube channel in May of 2013, the gaming channel BlueXephos, was earning anywhere between $681,700 and $6.4 million annually. Given that few people actually click on ads, however, the actual figure would likely be towards the bottom of that range (and not the 6.7 million dollars reported in Brian Warner’s CelebrityNet Worth article The 25 Highest Earning Youtube Stars. However, even that ‘bottom’ is close to a million dollars. That is a high bottom!
This article from a couple of years ago (2010)—Meet the Richest Independent YouTube Stars— lists the top 10 YouTube earners at that time with Natalie Tran (aka CommunityChannel) placing 10th with an estimated pre-tax annual income of just over $100,000. Although the list has been criticized as being inaccurate and based on overly simplistic analysis, it does provide a useful starting point.
The list of the top ten earners has changed substantially since that article was published, with newer channels like Felix Arvid Ulf Kjellberg’s PewDiePie and Ray William Johnson’s =3 pushing past almost all of those on the list. In 2013, the top earners are making even more.
According to Open Slate’s 2012 research—YouTube’s Top 1,000 Channels Reveal An Industry Taking Shape—the top 1000 channels at that time were making an average of $23,000 per month (i.e., over a quarter of a million dollars per year). However, there were claims that the average is too high. For example, commenting on the article, Alex Ikonn writes,
I am a co-founder of a Top 300 YouTube channel and one of the biggest channels in the How-to category and I can tell you that advertising revenue is nothing close to $23k a month.
It is likely that among the top 1000 channels, the most successful ones (i.e., the top thirty) are far ahead of the chasing pack and are therefore distorting the average (i.e, the mean income may be have been $23,000, but the median income—the income of the channels right in the middle of the top 1000—would be much lower).
Importantly, there are other possible sources of income such as merchandising, product placement, live performances and speaking engagements as well as advertising on associated websites.
It is definitely possible to earn a living and have a comfortable lifestyle if you are one of the top YouTubers and are pulling in millions of viewers for each video, but we are not at the stage yet where we are reading articles about YT stars buying luxurious LA mansions and private jets.
Sharing the Pie
To further muddy the picture, it is not always clear how a channel’s revenue is being distributed. For example, The Yogcast, the team behind one of the top-earning channels, BlueXephos, consists of twenty people (as of May 2013) including the two co-founders. In addition, the Yogcast team is part of the TheGameStationNetwork (TGS), which is a a division of Maker Studios, one of the largest YouTube networks (these are somewhat akin to television networks). If you belong to a network, a chunk of your revenue will go to that network. Yet another expense may be licensing. Because of the copyright issues related to using gameplay footage in YouTube videos, licensing fees may have to be negotiated with some of the producers of featured games. It should be noted, however that many game developers are happy to have their games featured on YouTube and will not require require licensing fees (the makers of Minecraft are a good example of this), so I doubt much money is spent on licensing.
To sume up, the revenue from the The Yogcast related channels like Blue Xephos would be somehow divided amongst the 20 or so Yogcast members, but not before a large chunk is gobbled up by TGS, Maker Studios and producers of some of the games featured on the channel.
Besides handling licensing issues, what else do the networks/studios do? Looking at the credits list in the following video in the Epic Rap Battles in History series (who are associated with Maker Studios) can give you a clue.
You might assume that the video was produced entirely by the two stars Nice Peter and EpicLLOYD; however, the credits in the description also include:
Three additional writers (Zach Sherwin, Dante Cimadamore, and Mike Betette), music beats (The Unbeatables and Dizzy Productions), song producer and mixer (Choco), director and editor (Dave McCrary), directors of photography (Jon Na and Layne Pavoggi), gaffers (Arthur Hong and Blake O’Neal), compositing and background design (Andrew Sherman), assistant editors (Ryan Moulton and Marc Chester), costume designer (Sulai Lopez), makeup and hair stylists (Eva Buinowsky and Tara Lang), art consultants (Mary Gutfleisch), production assistants (Jose Mendoza, Yev Belilovsky and Trent Turner), production coordinators (Shaun Lewin and Atul Singh) and producer (Michelle Maloney).
That’s a lot of help! That’s a lot of salaries.
Many YT stars have either signed contracts with large YouTube networks/studios like Maker Studios and Machinama or are working with their own crews. The studios provide technical, legal, creative and administrative support while taking a large percentage of the advertising revenue. In the contract dispute between Maker Studios and Ray William Johnson, Maker Studios argued that it deserved a larger percentage of Ray’s current and future income because of the large number of staff involved in the =3 show. In Ray’s written response— Why I Left Maker Studios—he reported the terms of the new contract he was being asked to sign:
They wanted 40% of my YouTube channel’s Adsense revenue after production costs, and more importantly, they wanted 50% of the show’s intellectual property in perpetuity. Let me clarify: they wanted to own 50% of the intellectual property of “Equals Three” for the rest of eternity.
Note that the cut taken by the studio is ‘after’ production costs.
Most popular video makers will eventually have to decide whether it is worthwhile for them to join a network; however, owners of gaming channels looking to earn money don’t have much choice because of the difficulty of obtaining rights to monetize game-play footage. Even if you don’t join a network and are independent, like Ryan Higa of Nigahiga, there are often co-founders (in Ryan Higa’s case, Sean Fujiyoshi, Tim Enos, and Tarynn Nago), as well as recurring actors and/or technicians that might need to be paid.
Thus, the terms ‘gross revenue’ or ‘turnover’ might be more accurate than ‘income’ when describing the money generated from a video channel. From that revenue, you would need to pay the staff working for you (or indirectly pay those working for the network you belong to), any production costs, licensing costs and related expenses, not to mention taxes.
If your format is a relatively simple one that doesn’t require much support like doing monologues directly to the camera (Phil DeFranco) or doing monologues and short skits (Natalie Tran, Ryan Higa), there is obviously more pie for you.
Can’t I Just Do Everything Myself?
You can, and you might have to at the beginning, but one trend is that popular channels and videos now tend to have high production values (well, a lot higher than a couple of years ago). And these values come with their own costs. In commenting on YouTube’s own list of top ten viral videos, Josh Dawsey reports:
Five years ago, when YouTube pieced together its first list of the year’s top ten videos, many were accidental home videos or amateurish films never designed for widespread consumption, said Kevin Allocca, a trends manager for the company.
With nine of the ten videos that made this year’s YouTube list coming from professional producers, making a video that appears to be an accidental hit is becoming increasingly typical….
“There are more and more people who know how to build an audience, how to use YouTube,” Allocca said. “There are companies who spend millions and millions of dollars trying to create these videos.” (YouTube’s Top Ten Viral Videos of 2012)
The Harlem Shake video craze, for example, was pushed heavily by Maker Studios. Though they did not create the original, they did create and promote the video (Office Version) that sent the silly dance viral (qz.com/67991/you-didnt-make-the-harlem-shake-go-viral-corporations-did/). A more recent example of a professionally produced and promoted viral hit is Telekinetic Coffee Shop Surprise, which is a promotion for the remake of Carrie.
It is getting more and more difficult for an independent amateur video maker to create a splash on YouTube. If you look at some of the relatively low production work of the early videos of the established stars, you might wonder how these videos would fare if they were new releases by unknown YouTubers in 2013.
Freddie Wong’s First YouTube Upload
A More Recent Upload from Freddie Wong (2013)
Do the Top YouTubers Deserve the Money?
The answer to that would have to be an unqualified ‘yes’. The most successful YouTubers have all been able to climb to the top of a very crowded and easy-to-enter market and are pulling in huge numbers of views. As of May 2013, the videos on Ray William Johnson’s =3 channel have received over two billion views and the 23 videos of Epic Rap Battles of History Season 2 have received half a billion views.
These views are not from one-off viral videos; they are from an established fan base built up steadily over the past couple of years. With those viewership figures, shouldn’t the stars be paid comparably to television celebrities? If we are going to make that comparison, we might conclude that YouTubers are underpaid if anything. For example, the cast of the reality series The Jersey Shore were reported to be making 150,000 (per cast member) per episode (working out to just under two million dollars per season).
Becoming hugely successful is one thing; staying there is another. The average number of views per video appears to be dropping among almost all the top YouTuber channels. For example, a couple of years ago, vlogger Jenna Marbles (www.youtube.com/user/JennaMarbles) was pulling in at least 10 million views per video, with her more popular ones receiving several times that number. Now, though still highly popular, she is generally reaching a more modest two to four million views per video, with only her most popular ones hitting 10 million. As most vlog videos get the vast majority of their views in the few weeks after being released, it is unlikely these new videos will ever come close to enjoying the popularity of her older ones.
This Wired article, The rise and fall of YouTube’s celebrity pioneers, looks at the video career trajectories or the original success stories on YouTube. Most of them have gone back to obscurity (which is not necessarily a bad thing!). How many of these early YouTube stars have you even heard of?
A related problem is keeping your audience, especially if you are targeting tween, teens or young adults or if you are making a trendy kind of video.
If you are targeting younger viewers, they are going to grow up and will probably grow out of whatever it is you are doing. Will you be able to captivate the next generation of young viewers? As for trendy videos, now reaction videos are quite popular, but will viewers start to get bored of the format after a year or two?
Another potential problem is that there is no guarantee that companies will continue to pour as much money into social media advertising as they are now doing. If companies. especially those using the banner ads, caption ads and pre-roll adds that most channels earn their money from, find such ads are no longer worth the price and stop running them, the advertising rates paid to YouTube channel owners would also drop, as they have done already earlier this year, falling from $9.35 per 1000 views (using pre-roll videos) to $6.33 (www.businessweek.com/articles/2013-04-22/its-getting-harder-to-make-money-on-youtube).
A fourth problem is that YouTube fame does not always lead to fortune. A good example of this can be seen in the work of the indie band OK Go, who have had phenomenal success on YouTube, with the the Rube Goldberg machine video for their song This Too Shall Pass getting over 40 millions views and the video for Needing/Getting closing in on 30 millions views. However, the band’s music has not really taken off. Of the three albums the band has released since 2002, the highest position on the US Billboard Album charts has been 40 (the first two albums reached positions 107 and 69, and the albums barely registered on the British charts).
As the band had to pay off advances from their former record label, they are not seeing any money from YouTube. In short, their great success with viral videos has not translated into great record sales OR advertising income (you can read antiquiet’s article Why OK Go Make Awesome Videos but No Money for more information).
Yes, it’s possible to earn a good living, but this only holds true for the most popular channels. Unless you can also develop and nurture a channel so that it stands out from thousands of competing channels or unless you can find a way to make money from your video work above and beyond advertising revenue (e.g., by selling your music arrangements or craft patterns, by setting up speaking engagements or consultancy work etc.), you can consider being a YouTuber as a kind of part-time job or hobby. And even if you can claw your way to the top of the heap, at the moment, the financial rewards do not really compare to the possibilities offered to the top stars in other entertainment fields.
Let’s take one last look at Natalie Tran, the top 10 earner mentioned at the beginning of this article. She recently took a half-year hiatus from her CommunityChannel vlogging and has just returned to making videos, though less frequently than before. The reason for the hiatus? She got a job in the ‘real world’. For anyone aspiring to Youtube stardom, that should be a sobering thought.
What do you think? Do the YouTube stars deserve the money? Leave a comment below.