I often get people asking me how money is made on YouTube. Generally, people might understand the basics of it, that it’s funded by ads, or something like that… but beyond that, it’s not clear for the general YouTube viewer.
Just like TV, advertisers pay YouTube to serve ads on videos on YouTube. The great thing about YouTube, unlike TV, is that YouTube shares a portion of that advertising money with people creating videos for YouTube. Think of it as a reward for producing quality content.
But there’s a few steps and a few ways that you need to follow in order for you to get some of that money into your pocket, if you so choose.
By allowing YouTube to display ads on your videos, you’re essentially allowing YouTube to monetise your videos for you. By monetising your videos, you’re trading ad space on or around your videos in exchange for money. YouTube’s ad sales team sells different types of ads on your videos, depending on what types of ads the advertiser chooses to buy.
Below is a chart that shows you the different ad types that YouTube can sell on your videos from least expensive to most expensive.
If you decide that you don’t want particular ads served on your videos, then you can essentially tell YouTube to serve only True View ads and not Overlay ads, for example, which decreases the potential amount of money you can generate. This is done on the Monetisation tab in the Video Manager on the video.
If you decide that you don’t want any ads served on your videos, then your videos won’t monetise and you won’t make any money.
In order to maximise the potential amount of money you can make from ads sold on YouTube, you should opt into all ad formats for all of your videos on your YouTube channel. This is what is called “maximising monetisation”. Anything less than this, is not maximising monetisation.
Did you know that there’s actually two different routes to be able to monetise your videos on YouTube? I’m going to explain both routes, and the benefits and drawbacks of each.
A. Opt into the YouTube Partner Program
This is by far the easiest and most often followed route to monetising on YouTube. Go to this page: https://www.youtube.com/account_monetizationwhile logged into your YouTube channel. You’ll go through a few steps to confirm that you want to monetise your videos, sign YouTube’s terms and conditions, and you’re pretty much done. You’ll also need to set up an AdSense account in order for YouTube to know which bank account to pay the monies to, but beyond that it’s pretty straight forward.
B. Join a Multi-Channel Network (MCN)
An MCN is essentially the equivalent of a record label in the YouTube world. They “sign” channels to their network, where in exchange for a share of the money generated from your videos in your channel, they provide a whole raft of services that support your growth on your YouTube channel. This includes but is not limited to:
In reality, all MCNs come in different shapes and sizes and are located in different parts of the world, are funded differently, sign particular channels over others (only music, gaming or beauty blogging channels for example), and provide different levels of support. What I can say is that, through Laika, we’re trying our best to change that image by providing transparent reporting and a high level of customer service for our channels. By being open and providing an ethical service, we hope that creators will want to work with us and grow with us for the long term rather than a short term.
So that pretty much sums up how money is made on YouTube in a nutshell. I hope this was useful, and if you have any further questions or comments, please comment below and I’ll do my best to reply.
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