How Does Youtube Make Money – Exposed
From its humble beginnings. On February 14th, 2005, founded in a room above a pizza shop in Menlo Park, California, three former PayPal employees started a simple video sharing site called YouTube.
In October of 2006, a little over a year later, Google buys YouTube for one point six billion dollars. Last year, it’s reported that YouTube generated over 15 billion dollars in revenue. It’s the third most visited site on the Internet, with over five billion videos watched each and every day.
But how does YouTube generate all this money?
How do YouTubers get paid?
How much can you expect to earn with one million video views?
Today, what we’re gonna do is expose how YouTube makes money.
We’re going to talk about how YouTube makes money, how YouTubers make money, how the whole process works, so that you can understand in more detail how affiliate marketing, Internet marketing and making money online really works.
Let’s go ahead and dive in.
Now, back in the year 2006, YouTube was purchased by Google for a crazy amount of money. Now, I pulled up some recent stats from the 2019 calendar fiscal year showing that YouTube ad revenue generated 15 billion dollars on that platform alone.
Now, to break this down for you.
Let’s talk about what 15 billion dollars is.
15 billion dollars breaks down to about forty one million dollars a day.
That’s a big stack of cash, isn’t it? T
hat’s like twenty eight thousand dollars each and every minute that YouTube is live.
Now, let me go through what we’re going to have in the rundown today.
In today’s lineup,
part number one, we’re going to go through a brief history of YouTube. I think this is important to understand where the site came from, how it operates, how the money is made part.
part umber two, we’re gonna go through and show you how money is made in real time, real world. Happening right now, live on the Internet, part number three. We’re going to show you what happens behind the curtain and the payouts that change hands part.
part number four, we’re going to dive in and we are going to show you five killer ways to make money with what you learned today.
part number one, a brief history of how YouTube works.
YouTube actually started as an online dating site. Yep, that’s right. The founder or one of the founders of YouTube was like, hey, I think we should have a site where people can upload videos and say, hey, I’m Marcus and I’m looking for this. And, you know, I’ve got a cat and a house and I work here. Want to go on a date? That kind of thing.
And so that is how it actually started. But they launched the site and chirp chirp tumbleweed. Nothing happened. Nobody uploaded a video for five full days and even longer than that. So they decided to regroup and say, well, instead of doing dating, why don’t we just let anyone and everyone upload whatever the hell they want onto this video platform? Well, within reason, of course. And the first video was posted by the founder. I think his name is Jaweed or Jared. Not sure how he pronounces it. Called “me at the zoo”.
You could see that video has over one hundred and seven million views to date. It was put up on April 20, 3rd, 2005. Now, in 2006, these three dudes from PayPal are like, we got this video sites pretty cool. We got some investors. It’s going pretty good. It’s getting pretty popular, but not like, you know, breaking the craziness popular.
In 2006, Google looks at this little startup and says, I think I’d like to drop about one point six, five billion dollars on that business.
And they do. They buy it for one point six, five billion dollars, which is insane. Now, here’s some other history things you need to know. In 2007, they started in video advertising.
This means you can now advertise on a video.
2007, later in that year, they started the YouTube partner program.
The YouTube partner program allows video creators like me to put a video up. Run ads on the video and YouTube slash Google. Split the money with me.
Great way for publishers and video creators to earn money with their videos.
In 2009, they hit a milestone of one billion views per day.
Now they get like five billion watches per day.
In 2011, they introduced Livestreaming.
I can connect my software to YouTube and go live and talk about whatever I want to talk about again within reason. You’ve got to be ethical and everything like that.
In 2005, YouTube red or YouTube. Premium comes out, they have about 20 million subscribers to that platform at about eleven dollars and ninety nine cents per month per visitor. Which is a small drop in the bucket compared to what they’re making on ads now. In addition, this little company got hit with major lawsuits, major issues. They’re all over the news. But it is the number one video watched platform in the planet, on the planet, somewhere in the world right now.
Let’s go into part two and talk about how money is made. Now, remember I told you. YouTube made fifteen billion dollars in 2019.
Now, another statistic is that the top 10 YouTube was just 10 people raked in over one hundred and sixty million dollars that year alone.
Now, I want you to think about that, because you got wow, man, those 10 guys are taking all the money.
Actually, they’re taking like one percent or less. The majority is going to smaller creators, which is good news for us. Now, some of the highest paid YouTube hours of 2009. This guy named Ryan. Twenty six million, dude. Perfect, 20 million. Again, these are from CNBC. I didn’t verify em, but I think CNBC probably did their job.
These are yearly, like imagine having a YouTube channel and making as much as a Hollywood actor from the comfort of your own home. Crazy, right?
That’s some of these people spend a lot of money and do a lot with their videos. And there’s hundreds of thousands of other creators that are making a living in a really cool way from the comfort of their own home.
Now, we want to look at that because that’s less than one percent of the total revenue generated.
So if you think it’s too big and you can’t get in. Think again. You still can. Now, here are some stats that I looked at recently.
MeetKevin, a popular real estate YouTube claims two hundred and fifty thousand dollars in revenue in just one month.
Another person, Shelby Church, has a video about a Tesla that does eleven thousand dollars on two million views.
Another guy claims over two thousand dollars on three hundred thousand views.
Sixty eight hundred a month on eight thousand views.
Four hundred a month on seventy five thousand views.
Hundred and seventy five thousand dollars a month from thirteen million. I’m sorry. That was for a year. Hundred and seventy five thousand for the year.
One point one million dollars from seventy nine million views. That was Graham Stephens channel and twenty eight hundred from five hundred and thirty three thousand views.
Now what can we learn from these.
Well one people are making a shit ton of money here on YouTube.
The numbers are all over the place. Like here’s someone who’s got a video about the Tesla thing. Two million views. Here’s a guy that’s getting like way more views, that’s making less money. So we’ve got to look at this. We’ve got to understand what’s going on. And we’ve got to know that not all revenue is created equal. We’re gonna dove in. We’re gonna show you how this works in a real world way.
Now, what we have to look at is advertisers and market segments.
Now, I thought it was important to show you what was going on and show you, like Google bought YouTube for a reason. And we look at this and in our video about exposing Google, which you’ll definitely want to check out, subscribe click the bell. Go watch that video after this one. We talked about how Google has the ad sense program, which allows advertisers to advertise for a keyword on Google. So you search for mortgage on Google. A bunch of mortgage companies can advertise on that keyword.
2006, they buy Google buys YouTube. And then 2007, they introduce ads. So what happens now?
All these videos that are being watched like a billion times a day can now have the option to have an advertising hit play before the video starts.
You’ve all seen it. It’s the skip ad, right?
And that ad is actually paid for using the GoogleAdWords platform.
So the Google AdWords platform says, oh, here’s some mortgage guys who want to mortgage traffic. Here’s some debt relief guys. Here’s some weight loss guys. Here’s all these people that want all this traffic right now. What we have is we have all these people watching videos, Here’s all our people. They’re all watching the videos. Lots of people watching the videos, 2007.
They’re like, let’s pop some ads on here. They already got the platform in place. Right. They’re like, all we gotta to do is use the advertisers we already have and get them to bid on the stuff. Now, not all keywords are created equal. And when you make money on YouTube, you’re looking at what’s called a CPM or cost per millie, which is weird because his millie, you would think is a million, but it’s actually a thousand. So it’s cost per thousand views. Now, what you’re going to notice is that there are some markets on YouTube that pay way more money than other markets.
So some markets on YouTube are paying a lot and some. Are paying little. So, like recipe’s pays a little, Mortgage’s pays a lot. Dating might pay middle of the road. And on and on we go. So you got all these people watching all these videos. You got all these advertisers who want the eyeballs. That’s all advertisers ever want is eyeballs. That’s it. So they put their ad on related videos. So if I have a mortgage site, I say, hey, I want to advertise on videos that are about mortgage.
If I have a recipe or a like maybe I’m selling the insta pot or something, I can advertise on recipe channels or maybe insta cart or something like that. I can advertise on those channels. And what happens is the algorithm goes out there, it finds the videos are that are about certain topics and it puts the ad in front of them. And what happens here is the advertiser comes in, right? And they’re like, OK, I’m going to pay per view, per click, per whatever.
So usually view or click. So when someone views my ad, I’ll pay five cents or I’ll pay a dollar or I’ll pay 10 cents or whatever it is. Right. So the advertiser gives the money to Google. Then the guy who created the video actually gets a cut in the YouTube partner program. Pretty cool, right? They’re like, hey, this is pretty cool.
Now, we don’t know the exact number of the cut, but I think it’s somewhere around 65 percent. Goes to the video publisher. Forty five percent goes to YouTube. Google. All right. So pretty cool. That’s pretty good. It’s like, hey, they got all the hosting services. They got all the software. They handle all that stuff. And I get paid. That’s a pretty sweet gig. Awesome. Now we go through and we look at this because it’s a perfect split. And this is what’s happening in real time all day, every day on YouTube. Over five billion videos are viewed every single day.
Some of them are inexpensive markets. And these are the expensive markets, real estate and mortgage credit cards, insurance loans, stocks, legal software, hosting addiction, make money, weight loss, fitness, online education and more. Now, you can be in any market you want to be. But obviously, if you want to get a higher CPM, you’ve got to be in a market that’s about one of these things. Now, in addition to this, YouTube’s also make money selling their own courses, doing affiliate marketing. Having people to their blog and running ads, all kinds of different things.
Also, sponsorships. A sponsor can come to me and say, hey, Marcus, I’ll pay X amount if you give me a shout out in your video or run this commercial or whatever it is. Right. So it’s very, very cool. And we have to look at this ecosystem because this is giving TV a run for its money. Like the TV. Advertisers are running scared because stuff is changing. Everything’s changing. Right. We got video on the Internet. We watch TV on the Internet. We got Netflix. We got all this other stuff. And we got YouTube dominating. And it’s doing over 15 billion dollars a year. That’s no small potatoes. That’s some real money. So we’ve got to look at this.
We’ve got to see how it works.
The viewers come in, they watch the video. YouTube puts the ad on the video related to whatever the advertiser wants to show based on whatever they want to show it on. OK. So, Mike, I want to show it on videos about credit cards or whatever, and then the publisher gets paid. So when we look at this, it’s very important to look at right now in order to do the YouTube partner program, if you want to be a YouTube and make money. You need to have at the time of this video, 1000 subscribers and four thousand hours of watch time in the last calendar year.
Not too bad. I mean, you can get to a thousand subscribers if you work and do the right stuff and focus on the right people and produce good content and things like that. Not that hard to do. Probably do it pretty fast if you want to. Now, that’s what’s happening behind the curtain.
Now, want to talk to you about five ways that you can earn money with what you learned today.
Number one, obvious you can start a YouTube channel and monetize it. You could literally go out there, start a YouTube channel and start monetizing it with ads and start making money in a very, very simple way.
Number two, you can start an entire brand channel and start a channel around you as the guru or the speaker or the spokesperson. Or if you don’t want to be in video, you could be behind the scenes and do slideshow videos and stuff like that, and you could start an entire brand around your YouTube channel. Again, it’s all about getting the right eyeballs to the right message. You can make money with this with affiliate marketing and things like that.
Number three, go and buy ads on YouTube. They’re dirt cheap and you could drive people to your Web sites or your videos or your channel or your offer or whatever it is. Number four, you could broker influencer ads. What does this mean? You’ve got a bunch of influencers who don’t know how to make money. You’ve got a bunch of people who do know how to make money. Put them together. You can make money and you can help find ads for other influencers. Broker it. Keep a portion of it right. That’s pretty much what the YouTube partner program is doing. All right. You’re using their platform.
Number five. You can create a channel and monetize it with affiliate marketing. This is by far my favorite way because I am able to make a lot more than even the highest CPM by selling my own stuff and driving people to affiliate marketing. This is extremely lucrative and it could work like crazy, as you guys see at the time of recording this. I’m not that big of a channel. We got to like almost seventy five thousand subscribers, like four million views. It’s small potatoes compared to other people out there. But I’m able to monetize it in a really, really cool way. And if you focus and your niche down and you look at exactly what you want to go for, you can start to make money.