YouTube Partners Get Rich Despite YouTube’s Reported Loss
Josh Chomik, a 16-year-old high school junior from NJ, told the NJ The Star Ledger that he’s making $1,000 per month from his videos as YouTube Partner with alias “Thecomputernerd01.” As I’ve reported a number of times, Michael Buckley, who hosts a celebrity gossip show on YouTube, quit his day job last year because his six-figure income was better than his day job as an administrative assistant.
Meanwhile, Credit Suisse speculates that YouTube will lose more than $460 million this year. Analyst Spencer Wang (let’s go easy on the name jokes) estimates partners make 0.4 cents, a number I’ve found to be wildly over stated.
I can’t validate this, but reported estimates of YouTube partner earnings range from $800 to $2,000 per million views. And nobody can tell you for sure, because it depends on where the videos are seen, how to ad inventory is sold, whether the ads are “pay per view” or “pay per click” and other factors.
But Wang attributes the real bleed from the horrific cost of streaming YouTube consumer-generated videos. While Partner content is profitable, the majority of video streaming is offset with paltry revenue from ads that fetch pennies per thousand views.
As a YouTube Partner, I have mixed feelings about this dilemma. I am confident that Google will determine a way to profit from its majority share in online-video viewing. But I feel like a shop owner in a mall that’s unprofitable.
- Will the mall close? Probably not.
- Will YouTube find a way to revitalize the mall by inviting major retailers (professional content)? Probably so. And just like a mall retailer needs foot traffic, I need both “views” and ads surrounding my videos… or I’ll be a corporate dude until I retire at age 90.
- But what will that mean to my little “Nalts” show? Will my shop be pushed to lower level, far from the foot traffic of the food court and major entry ways? Or will the pie grow so dramatically that I will continue to profit even with a smaller sliver?
As SNL alumnus Chris Rock says, “They’ve got the white mall, and the mall white people used to go to.” You know, I’m not sure that quote carried my analogy forward, but it’s funny anyway.
I am terrified of reporting my own income because I’m contractually forbidden (and I find it almost as obnoxious as my son Charlie flaunting to his siblings the 52 dollars he’s made for staring in my upcoming Oreo videos).
But I will tell you this…. Last month, thanks to an unusually popular Superbowl video (nearly four million views), I totalled about 7 million views. That gave my family our biggest Google check to date — still not enough to quit my job as a marketing director with four kids and frightening debt. But it was, after taxes, bigger than the 2008 annual bonus from my day job. Don’t get jealous, though, because our bonuses were weak this year and last month was not typical of my regular income (and remember I spend several hours a day slaving to create and promote my videos).
One thing’s for sure, though. If marketers and agencies fulfill the eMarketer projection on growth, it’s going to be a good year for YouTube, Partners, and those of us who want to enjoy free content even if it’s ad supported. Here’s the quote to which I refer:
Video ad spending this year, according to eMarketer, will run counter to overall economic developments, rising by 45% to reach $850 million
This comment has nothing to do with you tube or the future of online video advertising. This is for all of you who never read what I write here because it’s always too long, you know who you are.
When I was a really little kid I noticed something about ads on TV, especially local ads, you know the kind that want you to buy carpets or lumber or siding for the house… every commercial break you’re inundated with at least one of their ads, if not more. Sometimes they might even sponsor a whole movie. They become a staple of the community; least on local TV and maybe radio. Before long you’re standing waiting in line or on the train or bus singing the little telephone number jingle that’s sung in every commercial. It’s advertising that works, least on some level and even though you know deep down their product is probably sub-standard, you’ll certainly be over-charged if the salesmen gets his foot in the door; a low profession, and you’ll be completely unhappy with the product after a few weeks, if not that very day. Still, one day if you decide you need carpet, lumber or siding you’ll give them a call.
Here’s what I noticed, when this company stops advertising you’re almost relieved. You notice immediately they are no longer sponsoring the movie or old reruns from the 80s. You’re glad there’s a new sponsor, you think to yourself maybe their contract was up, or the station got a better deal from the new product, and as time goes by you forget about them, even though every now and again that stupid jingle pops into your head. Then all of the sudden they’re back in full force and all over TV, radio and print, it’s almost as if you can’t escape them. A week or two later you find out they’re going out of business. The onslaught was a last ditch effort to stay afloat before bankruptcy. You now embrace the jingle and carry it with you until you die.
Another great post Nalts. Some people are saying UGC is dead. But then there’s UGC and “SEMI-PRO UGC” (kind of how you described it in your predictions for 2009.)
I think calling UGC dead is premature. Fred just passed 1 million subscribers. Where there’s an audience, there’s opportunity. So what if my CPM’s don’t match Sony’s CPM (or guaranteed money) for streaming on YouTube? I don’t care. Having their content on YT increases the value of my BOBJENZ and WickedAwesomeFilms content because my little brands can compete for audience in the same distribution system.
You can’t deny that the 18 & under audience not only wants to interact with online content, but EXPECTS it. And when they turn into the 18-25, and the 25-36, it’s all about numbers. I get it — major brands want to align with prestige (I also work at a prestigious institution and we count on this for sponsorship) but numbers cannot lie. People will be able to make a career out of “semi-pro UGC” or at least supplement their income well.
I hope. 🙂
I just came back from a birthday party for one of Hank’s friends. Their house is incredible. I feel so inadequate. Make a video so I can take it out on you.
Jan – I read it. I’m worried for you.
Oh yeah, and then, as if it’s not bad enough coming back from that house that is huge, gorgeous, fully decorated with great stuff AND in a good neighborhood, I have to come home and read this stuff where you’re talking about this big paycheck you got from youtube.
I hate you. Or love you. Which is it? Could it be both? Or could it be neither?
Nah. Hate you.
They must have paid at least a million five for that house. Plus a hundred thou on the deocrating. And the wife doesn’t work. Where are they getting all that money?? Can anybody tell me? Huh? I’m listening!!! AGHGHGHGHGGGGHHHHHHHHHH!
I’m kind of having a bad day.
I have a rich friend here in town. He’s miserable, always complaining about his debt load. He drives a MUCH nicer truck than mine. He lives in a huge house (by himself). He has a successful business. I am broke, unemployed and sick living with two crazies. I am happier than him. His children come to visit me before seeing him. They ask me to go see him, make him laugh again. He’s a tough nut to crack but I can do it.
I’m pretty sure the small part of me that actually had hope that I’d someday get into the partner program, even at the rate I’m going, just fizzled away to nothing in the past couple of months. You know, with this hoo-ha of an economy we’ve got, and after reading this article, I don’t feel as if they’d be willing to let any more guys with under a thousand subscribers in who barely get any views. I mean, youtube is even kicking people out, am I right? Whatever, though. I don’t even want to get in for the money. I just want the banner!
ha
Oh I see! I’m allowed back in, huh?
Come on, you’re dying to tell us how much you got.
Today I leased a freakin’ Civic VP. Bottom of the line crappy-ass little car, and I love it. Who needs more than that? I’ll be damned if I’m gonna spend more than I absolutely have to on something as dumb as a car. And I sure wouldn’t waste my time feeling inadequate about my income or possessions vs. someone else’s.
But I might use my disposable income for hair plugs or Rogaine if I needed them. OK, that was low. Forgive me, Lord.
…yeah.
Thank GOD I made Charlie that stupid piggy bank made from the nut canister…
I was getting tired of counting it every fucking day.
::shivers::
BYE!! I’m going to go to San Francisco now! Bah hahahahaha! Have fun this week…minus 2 babysitters to San Fran.
AH hahahahahahaha.
I’m still laughing….
and will be all week.
Kel and I will perhaps leave you another voicemail. Full of love, of course.
You know, I’m not sure it’s fair to refer to popular YouTube partners as UGC. You have pro content, YouTube stars, and UGC. Each carried a different ad structure. The YT partners are vetted just like pro content, so it’s an ad safe zone… no copyright infringements and, theoretically, ad friendly. Thoughts?
@Kevin
I think there are more than just 3 tiers.
His name is “Wang”… hehe.
“You know, I’m not sure it’s fair to refer to popular YouTube partners as UGC. You have pro content, YouTube stars, and UGC. Each carried a different ad structure. The YT partners are vetted just like pro content, so it’s an ad safe zone… no copyright infringements and, theoretically, ad friendly. Thoughts?”
Nalts, THIS is the key idea. Web celebs are real and aren’t going anywhere. I think you’re right, it’s NOT fair to refer to YouTube Stars as UGC anymore. You can easily compare the content to reality TV except it’s much more personal. Damn, I wish I did more BOBJENZ than WAF in the early days! 😀
Great mall analogy, Kevin. I agree – the big changes coming down the pipeline for YouTube will either give us a big boost, or push us further into the basement. We shall see.
And why do I get the feeling that there’ll be about 500 Superbowl recap videos next year?
YouTube has got to be getting more and more viewers all the time. I dropped my satellite TV about a year ago. It was unnecessary and for the most part redundant… so why pay for something I don’t use? My guess is that there are hundreds of thousands of people who get most of their news and entertainment from the internet. Of course there is hulutube and other places like that, but still YouTube does offer quite a lot!
As for broadcasting companies coming in and predominating YouTube, it’s hard to say. But there could be a three-tier situation pretty soon: 1) Pros, 2) Partners, 3) Peasants. (I suppose actually a fourth-tier would be viewers who don’t post videos.) As a peasant, I’m not looking forward to getting even fewer views than I now attract, but it’s hard to compete with the Partners and it’s going to be even harder when the Pros become a bigger part of YouTube!
This is what I believe the tiers in the new system will do is adjust to how serious people are about making money in this system (keep in mind, that doesn’t mean I am correct):
1. Corporate: lots of money spent, serious production values, promotion machine (big names, talk show appearances, features in publications)… what you see on TV now. Advertising worth big bucks.
2. Professionals: some money spent, still serious production values (people not sure if it was made independently or with funding), spends some money, but somewhat reliant on audience for promotion. Still staffs of people, and advertising is worth pretty good money.
3. Semi-Pro: very little money spent, though production values are still quite good (people can tell it was made independently). Promotes with a zero budget, encourages and sometimes relies on virality. Several people working together that all make a living off of the advertising money coming in.
4. No-Crew: Almost no to no money spent, production value somewhat irrelevant (and you will see both good and bad) as people watch with the understanding that for the most part, this is one person doing all this. Promotes themselves, some audience participation in the spreading of videos but not enough to be counted on. Has a cult following, however, and is probably going to be the “lowest” tier of partner. MAY make a living and may not, kind of depends on length of time spent building audience.
NOTE: can contain several people, but CAN NOT HAVE A CREW. On-Camera talent produces the content as well.
5. “Peasants”: Make videos but have not been partnered. Quality can go either way. Sometimes doesn’t necessarily understand how exactly to build an audience. Has a message or worth to their videos, but makes them in spurts or sporadically (therefore not super great for selling ads against).
Many people will get to this point and give up because they think YouTube is no longer “about the art” but rather “who you are” instead of realizing that it’s about neither. Many others will become more regular in posting, develop methods to produce and promote, and engage audience and move up to the next tier.
6. Hobbyist: Dogs, cats, fat people falling, dancing, sillyness. Some produced content but for the most part not trying to do much. Not on YouTube to go anywhere with it. Just having fun.
7. Viewer.
————————–
I think you’ll see some flukes where the One-Man becomes as popular as a Professional (and maybe even one or two who achieve the same level of the Corporate, even) and plenty where the Corporates/Pros/Semis fail miserably.
First congrats Nalts on hitting 100,000 subs (100036 as I write this) as a partner I make about 150-200 bucks per month. However Google makes money off of me but that is offset by the large number of videos that they can’t make money off of. This of course is due to copyright infringement on so many videos. Looks like YouTube is moving the big stores in the Mall so hopefully that will turn things around for them.