The Monetization Conundrum Of Online Video
With the possible exception of the Super Bowl, I’d bet it’s safe to say that nobody likes ads. Whether before a movie or video, in commercial breaks during television programs, or in the middle of your favorite podcast, nobody really enjoys being told to buy this product or use this service (often in a cringe-worth way) while they are enjoying their entertainment. Yet advertisements aren’t going away anytime soon; with the larger and larger audiences their ads are reaching, companies remain willing to allocate precious dollars to get their name out in every way they can. In the world of Internet publishing, ads have persisted as the staple of a creator’s income, despite significant shifts in the media landscape. But for online video, currently dominated by YouTube. advertisements have been a challenged revenue channel for creators hoping to earn a living.
I love YouTube and have a massive respect for the creators who have made it their full-time occupation to publish videos on the platform. These individuals spent an incredible amount of time and effort to become popular enough just to quit their day jobs and spend their time earning a living via YouTube. The sad part is that making a living on YouTube is harder than one might think. With popular YouTubers like PewDiePie making up to $7 million per year, it might be easy to regard YouTube as an easy path to fame and riches. But really, every YouTuber with even just 5,000 subscribers have put their heart and soul into their videos. As it is, money coming from ads just isn’t enough to allow YouTubers to start making videos full-time until they become very popular, a level which many never reach.
Let’s do the math. The average personal income in the United States is roughly $30,000. The current YouTube ad rate is a $2 CPM ($2 for every thousand views). To earn even the average U.S. income, a YouTuber creating weekly videos (a common schedule) would have to average nearly 300,000 viewers per video, an average usually only met by a YouTuber with around 2 million subscribers. (this varies from channel to channel) Of course, the rate at which you create videos is key in this calculation; if you make a video every day, the average view count drops to a more plausible 40,000. Compare that to the average CPM rate for TV, which is $19 (for an average 22-minute show). With that rate, you would only have to get 30,000 views per weekly video to reach the national average – much more sustainable.
This isn’t just about YouTubers making more money because their media peers in television and film earn more. I’m not writing this out of pity for the struggling YouTubers who can’t earn a living wage yet are spending all their time trying to grow their audience. The reason the $2 CPM needs to be increased is because it simply isn’t enough to allow YouTubers to grow and make the great content we all want to watch. Take Olga Kay, a YouTuber with around 1 million subscribers across her five channels. In an article written in the New York Times, Olga talked about her hectic work schedule and about how “If we [her friends] were coming to YouTube today, it would be too hard. We couldn’t do it.”
Olga said in the article that she has made $100,000 to $130,000 every year for the last three years, which is a good income; yet she is still constantly stressed about finances, as much of that $100,000 goes straight back into her channels to pay for editors, equipment, etc. Let’s be honest: no one making twenty videos a week, almost three per day, especially with 1 million subscribers, should be that worried about finances.
This is the first part in Fast Forward’s two-part series on the YouTube’s advertisement and monetization conundrum. Stay tuned for the second article in the series over the next few days!