How YouTube could make you millions
If the day job is getting you down, surely the ever-exploding world of technology can offer a less tiresome way of paying the bills? Look at all those kids making fortunes on YouTube unboxing gadgets, playing Minecraft and talking about make-up – they’re making millions of dollars in some cases. How hard can it be?
Certainly it’s possible to make a fair chunk of money from posting videos on YouTube: in the UK, the poster-girl for vloggers is Zoella, the 24-year- old fashion guru who bought a £1 million house in Brighton from her handsome profits. Earlier this year the highest-earning YouTube star wasn’t pop star Taylor Swift or any of the big brands, it was an anonymous user called DisneyCollectorBR, thought to be a 21-year-old woman living in Westchester, New York – although nobody actually knows except the video-blogger, or ‘vlogger’, herself.
With almost no clues to her actual identity available, DisneyCollectorBR, whose videos of her perfectly manicured, anonymous hands ‘unboxing’, or opening from their packaging, Disney toys, is a source of fascination for her very young audience and marketeers alike, as she seems to have cracked the secret of making compelling videos and making money. She was reckoned by OpenSlate, an analytics platform, to have made $4.9 million (£3.2 million) last year, while Social Blade, another company that tracks YouTube statistics, estimates that she will make up to £9.8 million this year in ad sales on her YouTube channel.
That is a healthy slice of Google’s advertising income. While Google doesn’t break out its figures for YouTube, the search and advertising giant had revenues of $17.7 billion (£11.5 billion) in the second quarter of this year, and eMarketer reckons YouTube would have generated $1.1 billion (£700 million) of video ad revenues last year. Meanwhile, BI Intelligence has predicted that online video ad revenues will be nearly $5 billion (£3.25 billion) next year.
Christopher Bingham, who started out in 2006 as a comedian posting videos to YouTube and who is co- founder and chief operating officer of Reboot the People, a talent management company that specialises in video celebrities, says that at the height of his popularity between 2010 and 2012 he was “earning a comfortable salary, a few thousand a month, albeit quite variable”.
So there’s a big chunk of money just waiting for you via YouTube, right? Not so fast: going from posting videos of your cat and getting half a dozen views to becoming a global superstar is much more easily said than done.
Barney Worfolk-Smith, commercial director of That Lot, a social media creative agency, points out that YouTube stars tend to be very young: “They’re very videogenic,” he says. And you only have to look at photographs from Vidcon, the annual get-together in California of those seriously into vlogging and social media, to see that it’s very much a young person’s game.
And these are very savvy young people. Their videos might look homespun but, increasingly, the big earners are managed by multi-channel networks (MCNs), agencies that work with vloggers to build their audiences and their revenues. “Wherever there are young people, there’s some money man to pull things together”, says Worfolk-Smith.
These MCNs curate and develop videos with the content creators and then partner with big providers such as YouTube and Vine to syndicate, distribute and monetise the work of the young vloggers. And they’re very good at what they do: PWC estimated in a report last year that leading MCNs were attracting between three and four billion video views each month.
“The tone, voice, and production all emphasize (sic) an unfiltered ‘authenticity’ that is specially designed to appeal to a millennial or even younger skewing demographic, as can be seen through the videos of MCN-based YouTube stars like teenage fashion sensation Bethany Mota, videogame critic PewDiePie, and Truth Mashup, an online comedy show,” notes PWC in its report, The rise of multichannel networks – Critical capabilities for the new digital video ecosystem.
Authenticity is a key attribute but to succeed, says Worfolk-Smith, “there has to be something that makes people stand out”. He adds: “You have to have a thing. It could be really simple, like a ‘10 reasons I love’ something each week. Growing an audience by yourself is incredibly difficult – it requires a blend of things; there has to be something that makes people stand out.”
Bingham agrees that building a following is hard work and adds that it is much more difficult now than when he started posting videos to YouTube in 2006. “I was part of a huge bubble,” he says. “Nowadays, you face an oversaturated market that’s harder to break through. I got by on free social platforms.”
Building that audience is where the MCNs come in. Damian Collier, senior vice-president of business affairs and enterprise at Rightster, an MCN, says: “We have been working with brands, agencies and producers for a number of years on social platforms including YouTube, Vine, Twitter, Facebook and Snapchat to help grow the audience, engage consumers and build loyalty by connecting with the world’s most popular digital content and social media creators and bloggers.”
Bingham picks up the point about multiple social platforms. Back in the day, it was mostly YouTube but now, he says, “online video is an entirely different beast to the one I met in 2006.
“YouTube is no longer the obvious choice it was for me. The internet of this decade is one of myriad opportunities as new contenders and services enter the fray.”
It’s when the big brands step in that the big bucks start to roll in. However, those partnerships need to be handled carefully, says Worfolk-Smith: “They used to get kids to hold things, which was deeply patronising.” And it wasn’t always particularly brilliantly paid, he adds: “Youngsters weren’t getting much money at all. They got massively over-excited if a brand asked them to do something and they got a free camera, or a year’s supply of Creme Eggs.”
That was also unsophisticated and cost vloggers their precious authenticity, he says. “They would then shoehorn the product into their videos, and then they wouldn’t be doing what they were known for and would lose subscribers in their droves.”
Collier at Rightster echoes Worfolk-Smith, saying: “It is important for the brand to allow vloggers to drive the creative production of the video in order to remain authentic and avoid alienating their engaged and loyal audience.”
Bingham agrees that brand sponsorship is where the real money is to be made, with adverts via Google’s AdSense platform, “a smaller slice of the pie. Direct brand deals and sponsorship are how popular influencers make real money”.
Bingham’s business sense, which has seen him move from vlogging into talent management, comes to the fore when he adds: “Most brands are happy to part with free product but they shouldn’t expect promotion without a real budget.”
Vloggers being paid by brands to plug consumer goods were often less than transparent about their affiliations. That unsatisfactory state of affairs was brought to a halt in the UK last year when the Advertising Standards Authority (ASA) stepped in with a landmark ruling that made clear vloggers would be breaking the law if they failed to tell their viewers they were being paid to promote a product.
That ruling came in the wake of a campaign for Oreo cookies that involved a number of high-profile UK vloggers, including Phil Lester and Dan Howell, Thomas Ridgewell and Emma Blackery. Newsround, the BBC news programme for young people, raised the campaign with the ASA, which ruled that Mondelez, the company that owns the Oreo brand, had not made it clear that the videos were paid-for marketing messages.
That ruling was followed up by the Committee of Advertising Practice (CAP), which published guidelines for vloggers working with brands in this way. The CAP pointed out that “a key rule under the CAP Code is that if the content is controlled by the marketeer, not the vlogger, and is written in exchange for payment (which could be a monetary payment or free items), then it is an advertisement feature and must be labelled as such.”
One observer of the industry reckons that this was “the ASA wanting to be seen to be doing something” but adds that it is important that vloggers are “staying true to doing their thing”, and says: “The debate should continue on how this is signposted.”
It’s not just sponsorship and brand-placement deals that make money for vloggers. With a respectable number of subscribers, revenues from adverts sold against their videos can be substantial, too. Collier says: “Vloggers also make money from YouTube through the shared revenues from advertising placement; for example, pre-roll advertising”. Pre-roll ads are the ones that show before the video starts. He adds: “YouTube shares revenues with creators, generally on a 55%/45% split with the creator. Companies such as Rightster also sell premium advertising over and above what Google’s sales team can sell.”
And, of course, there’s licensing. Collier says: “Licensing social video content off-platform, for example taking YouTube videos and licensing them to TV shows, films and into advertising campaigns that do not necessarily sit on YouTube” can also be a way of making money from vlogging.
There is certainly big money to be made: among the most profitable YouTube channels last year was that of PewDiePie, a Swedish videogame commentator, estimated by Openslate to have raked in $3.9 million (£2.5 million), while Little Baby Bum, which posts videos of nursery rhymes (including a 54-minute compilation of Wheels on the Bus that has been viewed nearly 850 million times in a year, presumably by close-to-the-edge parent with sleepless toddlers) raked in $3.46 million (£2.25 million) last year.
However well you’re doing, though, there is always something cooler waiting round the corner to take your crown. Every year, Vidcon is packed with savvy teens managing their social media accounts as they rub shoulders with the brands and the middlemen, all trying to make deals with the next big star. For those who can’t make the trip out to Anaheim, there’s the similar Summer in the City convention in London.
Despite the size and importance of these conventions, they barely create a ripple in the wider world. That baffles Barney Worfolk-Smith, who says: “During Summer in the City, I found it surprising out in the newspaper-reading world of the home counties they don’t realise that this enormous segment of youth culture even exists.”
However, even the hottest vlogger needs to have a plan B. You might think that broadcast television would be the obvious next step but many bloggers prefer not to make that jump. Melanie Murphy, an Irish vlogger with nearly 275,000 YouTube subscribers, not to mention more than 10,000 Twitter followers, some 7,600-odd Facebook fans and 21,000-plus Instagram followers, has no desire to make the jump from social media stardom to broadcast TV. She told the Irish Times in August: “I would have less creative control, more hours, less money and less people seeing it, so I said no.”
Christopher Bingham, who still creates videos for his YouTube channel but who now spends most of his time producing music as High Five Spaceship, is a good example of how to make a hobby into a sustainable way of life. From starting out as a sixth-former in 2006, he went on to study film and says: “Nowadays, I take more time to consider what a video needs to achieve, my goals for a project and its context as part of my growing body of work. That’s not to say that I take every upload incredibly seriously but I definitely take more care.”
He concedes that he was lucky to get in “on the ground floor” when YouTube “was just the obvious place to put things we were making. It seemed natural to take advantage of a free platform, and we quickly realised we could also reach an audience and – after AdSense – make money.”
Bingham says he’s been lucky but he’s also been smart. “I’ve been lucky thus far not to need a Plan B and even as I move more behind the scenes as a businessman and entrepreneur, my work remains in the online video space.”
So if you’re young, quirky, immersed in all the social media platforms, very hard-working ready to do deals with brands and MCNs, able to move quickly in a crowded, ruthlessly competitive market, tough enough to cope with the fickle fads of your teenage peers, and just plain lucky, yes, you could make big money from vlogging and social media.
Or you could just stick to posting videos of the cat on YouTube.