one hand with the amazon.com logo in it, a second hand holding the youtube logo

The currency of online advertising is CPM, which literally means “cost per mille” — mille is Latin for thousand. If we apply this “cost-per-thousand” metric to online advertising, then CPM is the cost of one thousand impressions — an impression is a single ad shown to a viewer. You can earn a slice of that revenue. 

YouTube is King

YouTube was created in 2005, acquired by Google in 2006 and is indisputably the largest online digital video warehouse. YouTube states that more than one billion users visit each month. Hundreds of millions of YouTube members upload 100 hours of video every single minute.

You might be sitting on a gold mine.

YouTube created its “Partner Program” in 2007 allowing videomakers with a free YouTube account to enable the monetization feature through their settings dashboard. The program now includes more than a million people earning money from their YouTube videos. Thousands of channels — a collection of videos under one account — are making more than $100,000 a year, according to YouTube.

So how do you go about turning your videos into cash on YouTube? Most importantly, you must own 100% of the content — that means you hold worldwide commercial usage rights to both the audio and video content. Say you have a cute video of a pre-school ballerina who comically misses a cue while performing to a copyrighted song. You may have a video with huge audience appeal, but there’s a problem if copyrighted music is playing in the background. The only solution is to acquire the rights to the song — that can get expensive and complicated. 

Ad Varieties

YouTube ads take three forms: display ads, overlay in-video ads and what YouTube calls TrueView In-Stream ads.

Graphic showing that YouTube ads take three forms: display ads, overlay in-video ads and what YouTube calls TrueView In-Stream ads.
Graphic showing that YouTube ads take three forms: display ads, overlay in-video ads and what YouTube calls TrueView In-Stream ads.
Let’s take a closer look at each type.

Display ads are 300×250 pixels and take the form of typical Google-style webpage ads — remember, Google owns YouTube. Once registered in YouTube’s Partner Program, display ads appear by default on partner’s pages. When a viewer clicks on one of these ads, you earn money. If you embed your video in another website, you won’t take advantage of the moneymaking potential of these ads. Partners have a choice of allowing embedding or not.

Overlay in-video display ads are banner ads that appear near the bottom of the video window, minimally obscuring your content. The opaque ads appear at about the 10-second mark and, if desired, can be closed by the viewer. The ads minimize automatically if the viewer does nothing. Since they are impossible to ignore, overlay in-video ads generate more revenue than display ads. You can opt-out of including these ads on your YouTube channel.

TrueView In-Stream is akin to advertisements viewed on broadcast television. In most situations, the ads precede your content. But, depending on the length of your work, ads may appear during or at the end of your production — just like your favorite sitcom. Like live broadcast TV, it’s not possible to avoid these in-stream commercials. However, YouTube claims that 75% of their in-stream ads are skippable after five seconds of viewing. You can opt out of these too, but these ads can potentially pull in the big bucks.

Infographic that states YouTube claims that mobile viewing comprises 40% of global viewing time, 80% of traffic comes from outside the U.S. and it supports 61 languages
YouTube is available on hundreds of millions of mobile devices. In fact, YouTube claims that mobile viewing comprises about 40% of global viewing time. Speaking of global, YouTube supports 61 languages. That’s a good thing because the video warehouse giant reports that 80% of its traffic comes from outside the US.

Paid subscriptions are yet another method to monetize your YouTube content. If you have a channel with more than 10,000 subscribers, you can activate this option. For viewers, channels offer 14-day free trials, followed by subscription rates beginning at $0.99 a month.

Product placement has become a necessary evil for healthy revenue streams in many broadcast television series. For instance, Toyota paid to be included in scripts of the award-winning sitcom “Modern Family.” Sure enough, you’ll find several shameless plugs for the Toyota Prius, for instance. Once YouTube producers find large audiences, they may choose to increase their earnings by including product placements — also called “brand integration” — in their work. However, YouTube may decline to monetize productions with product placements. The best advice is to check first. 

Step up to Vimeo

In 2004, Vimeo launched its video-sharing website — this competitor actually beat YouTube to the web. Vimeo’s statistics pale in comparison to YouTube, but nonetheless, it boasts more than 26 million registered members and reaches an audience of 168 million each month — not too shabby. Vimeo attracts serious filmmakers and offers fewer unrefined productions — like GoPro cameras attached to anything that moves.

For $9.95 per month — or a price break of $59.95 per year — Vimeo Plus allows members to activate a virtual “tip jar.” Happy viewers can submit tips using their credit card or PayPal account. For more social networking reach, tip activity can be shared to Facebook, Twitter, Tumblr and Google+.

Step up to Vimeo Pro for $199 per year to take advantage of Vimeo’s on-demand service that allows viewers to rent or buy your content. Launched in 2013, Vimeo On Demand is a direct distribution system that allows video producers to set their viewing price, format (stream or download) and geographic reach while maintaining full ownership. Vimeo offers in-player transaction support, enabling producers to sell work on their own sites or embedded elsewhere.

Filmmakers have posted more than 6,000 titles to Vimeo On Demand covering a broad range of subjects since its launch. Content creators keep 90% of revenue generated, while Vimeo hangs onto 10%. Viewing prices start at $0.99.

Selling tickets to viewers to watch a live video event is another way to monetize your work. Going live can bring immediacy and excitement to your content. Ustream offers a paid service, starting at $99 per month, which allows producers to sell access to live pay-per-view events. Ustream handles the viewer’s Pay Pal and credit card transactions, leaving you free to focus on creating something compelling for your viewers to watch.

Direct sales of DVDs are yet another way to turn your work into cash. Amazon offers an Individual Plan that allows a maximum of 40 sales per month. This plan charges the seller $0.99 per item, a referral fee of 15% of the selling price and a closing fee of $1.35. Step up to unlimited sales with the Professional Plan for $39.99 per month plus the same fees as the individual plan. 

Path to Success

There’s at least one company with the mission of helping people find more success with their YouTube channel. For a slice of your profits, Maker Studios, owned by the Disney Company, specializes in helping YouTube content creators hit it big on the global stage.

One Maker Studios' success story is a YouTube channel called PewDiePie (pronounced PEW-dee-py) run by Felix Arvid Ulf Kjellberg, a Swedish video game commentator.

Infographic that shows PewDiePie has more than 26 million subscribers, more than 4 billion views, and estimated monthly earnings ranging from $169,000 to $1,400,000
According to SocialBlade.com — a free website that estimates the earning potential of YouTube channels — PewDiePie has more than 26 million subscribers and has amassed more than four billion views. These numbers translate to SocialBlade estimating monthly earnings for PewDiePie ranging from $169,000 to $1,400,000. Not bad, even at the low end.
Aaron Lobnitz, a 23-year-old California college student and avid video gamer, is adept in how to earn money through YouTube. However, he’s realistic about his slender chances of becoming the next PewDiePie. He does remain optimistic though, in YouTube’s moneymaking potential. “YouTube content is a great way to drive traffic to your website and then advertise a product to them,” Lobnitz said. For example, Lobnitz uses affiliate programs like iTunes and Amazon, which offer a slice of sales that originate from the owner’s website.
Maybe your chances of scoring the next huge YouTube viral sensation seem distant. Possibly a more realistic goal might be to earn enough cash to buy that next piece of gear you’ve been dreaming about. Whatever your aspirations, go out, create some compelling content and watch the cash stream in. 

 

Sidebar

Loops to the Rescue

YouTube is incredibly efficient at finding and blocking copyright infringement in audio and video content. What if you buy music on iTunes or Amazon, can you use it in your monetized online videos? In a word, no.

Typically, when you purchase music you only buy the right for personal use. In order to use the work in a for-profit venture, you’ll need to purchase a much pricier commercial license. One solution to avoid copyright infringement is to create an original instrumental music score for your video. You don’t need to be a musician — all you need are some music loops and software.

For Windows, Sony offers ACID Xpress software — a free version of their popular Acid Music Studio. Or, you can own FL Studio Fruity Edition for a little over a hundred bucks. All new Macs include GarageBand — powerful, yet simple software that includes loops to make original compositions. In most situations, music created with purchased loops belongs to you and is usable in any manner.

David G. Welton is a professor of Media Studies

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