This morning, I’ve seen a whole lot of my friends linking to this article about the amount of money that YouTube stars make. The general consensus has been that many of them are in the wrong line of work and that riches and stardom are simply a clever YouTube channel away.

And I’d think it were cute if the article weren’t so painfully misleading.

It’s always tempting to think you can quit your day job to do something fun and that the world will throw riches at your feet for it. The truth is a lot more difficult and a lot more complicated than that. There absolutely are people earning sizable revenues off YouTube right now, but they’re the exception rather than the rule. Actually, it’d be more accurate to say that they’re the 1 in 100 million exception to the rule, so roughly speaking your odds of having a massively successful YouTube channel are about equivalent to winning the lottery. One requires you to invest in video equipment, develop a fan base, and become an effective self-promoter. The other requires you to buy a paper ticket at the grocery store and look up the results--not to put too fine a point on it, but if your goal is a good ROI you should invest in scratch tickets.

How do I know this? Because I’ve operated at YouTube channel for the past seven years that by any rational measure has become extremely successful in my particular niche--and it is all but useless to me as an income stream source. So, before you go out and buy a video camera and start seeing dollar signs, let me take you through what YouTube monetization is, how it works, and what its limits are for content creators.

What is monetization?

YouTube has what it calls its Partnership program for people wishing to monetize their channels. Several years ago, YouTube began experimenting with posting advertisements in videos. At first they were either banner ads on the side of the page next to the video or text-based ads that covered the bottom third of the video window itself. A couple years later, they introduced preroll ads, short videos that play before your video does. Some of these videos can be skipped after a few seconds and some can’t be skipped at all. Finally, they added these video ads not before but during a person’s video.

YouTube actually has an incredibly clever business model when you think about it. They don’t pay to create the content that goes up on their site--it’s all user-created content, so unlike a major network they have no startup costs for creating any of it, only costs associated with hosting the content and paying out to copyright owners whose content winds up in various videos like music labels and movie studios. All the content you view on YouTube was created by a person not unlike you, so anything can have a chance to find an audience on the site without the need for ratings or a budget.

Both to encourage people to post content as well as in the interest of fairness (because let’s face it, YouTube has revenue because users contribute to it), YouTube created its Partnership program to share the income it gets from those ads with its content creators. Not every channel qualifies--you have to demonstrate that you’ve cultivated an audience and are likely to continue to produce content (a full list of requirements can be found here). But those that do are entitled to share in the revenue their videos generate based upon those ads. There are essentially two ways you earn revenue:

1. Somebody clicks on an ad that was displayed in conjunction with your video.
2. You link to someone else’s video and a viewer that followed your link then clicks on an ad in that other video. Basically, referral traffic.

Advertisers on YouTube pay the service for every thousand views their advertisement may receive--called CPM for cost per thousand (Why “M”? Because we’re going with thousand in Roman numerals--no, it makes no sense at all but it’s also hardly the most absurd element of this process). Some ads, like the banner ads next to videos, are relatively inexpensive because they also do little to interfere with the viewing experience. Ads that show as preroll videos are a lot more expensive because they do interfere with the viewing experience.

I’ve seen numbers anywhere between $1 and $10 as figures that advertisers will pay as CPM on YouTube videos. So that means for every thousand views you get, you get between $1 and $10, right? Nope...remember you’re splitting revenue with YouTube, not getting all of it. YouTube takes 45% of the revenue from each ad.

So hypothetically speaking, if you’ve posted a video that’s gotten 5,000 views, you’ve monetized it, and your average CPM is $10, you should expect to take home $50, right? Again, not necessarily. This is because not every view is monetized. Frequently mobile views and views that are embedded on Facebook aren’t monetized and don’t count toward your earnings.

If you'd like a great primer on this system, check out this very informative and entertaining video from the Professor Puppet channel:

Who benefits from monetization?

The article on Notable would have you believe that YouTube is practically printing money for its stars, but you’ll also notice that it estimates figures for only 15 channels. There’s a good reason they’re doing this: the last estimate I saw was that there are currently over 500 million channels on YouTube with over 1 billion active users. Granted, not all those channels are monetized, but they’re also clearly cherry-picking some quite extraordinary outliers for the numbers they’re quoting.

The numbers vary wildly depending on the type of video being created, but by and large you can expect to get between 3 and 9,000 views on a given video. If you’re producing a single video a month (which is actually a much more aggressive schedule than you might think), you’re hopefully looking at 72,000 views in a given year. If we assume the $10 CPM figure I quoted above (and bear in mind that is EXTREMELY high), with every view monetized you’re looking at earning $396 for your videos per year.

Yes…$396. Per year. Basically, $33/month (which we’d already said is equal to one video). You’re making minimum wage if you spent 3 hours or less on it.

So this opens the inevitable question up of if this is how the average YouTuber is doing, why do it at all? Well...a lot of people enjoy the attention and of course there is always the chance that you will become that 1 in 300,000 success story where you do earn big bucks on the platform. Just like in music, theatre, film, and other entertainment mediums, extraordinary success is only enjoyed by a small minority of artists--the majority of artists still work day jobs or barely make ends meet.

Clearly, however, the biggest winner in all this is YouTube. The more people who believe that they’ll make a huge income making videos on the service, the more content YouTube gets and regardless of if it’s a winner for you it’s more cash in the bank for them. 300 hours of video gets uploaded to YouTube every day. Regardless of whether it finds an audience or not, it’s income for YouTube that doesn’t require any sort of investment on its own part. Thus, it’s in YouTube’s interest to encourage more people to put videos on its service.

Really if you get down to it, sharing income with creators is as much in YouTube’s interest as anybody’s. It provides even a small incentive for people to create content to watch on the platform and every new minute of content posted to YouTube is another few dollars in the bank for them.

A case study: how much do I make on YouTube?

So we’ve know how the platform works and we’ve put together a hypothetical average YouTube channel, so how about I show some real numbers to give you a rough idea of what the ball game looks like?

I started my channel, TaoAvatar20, back in 2007 a year after the platform launched. Originally I just watched other peoples’ content, but eventually caught the bug to create content myself and started a video series called Drex’s Tech Poi Blog, a weekly video showcasing the latest tricks I was learning as a poi spinning artist. At the time, there were very few channels with poi related content on YouTube--the biggest name, of course, was Nick Woolsey (and he still is). There was also Zan Moore’s channel, Noel Yee, Alien Jon, and a small smattering of others. I started creating videos because it seemed like the barrier to creation was fairly low and I was interested in learning more about regular content production.

At first I did absolutely no promotion on my videos and relied on word of mouth for them to get around and find an audience (to be perfectly blunt my first few videos were terrible and I knew it--I didn’t want to point people to content I wasn’t proud of). Over many years, my audience grew and my channel mutated into an educational channel with improved production values and a regular schedule, plus multiple types of video offerings including interviews, news reports, and product reviews.

As of this writing, my channel has accumulated more than 1,600,000 views and I have more than 11,000 subscribers. I am currently the 4th most watched poi spinner on YouTube (behind Nick Woolsey, Yuta, and Lindzee Poi) and easily the most prolific content creator in the entire flow arts community. By any sane measure of success, I am one of the more successful YouTube artists in the flow arts world, so what is that worth on YouTube?

Take a look at my stats for the year--I’ve had 158,857 views since January 1 for an average of 39,714/month. In that time I’ve made $145.55 off my videos, or $36.40/month. At this rate I’ll make $436 this year on YouTube. A little more than the average YouTuber we profiled in the last section. That’s not even enough to pay my cell phone bill, let alone enough to live on or the millions of dollars the article says YouTubers can make.

There are some mitigating factors here, of course:

1. I post videos on a very niche interest for which the audience is still relatively small.
2. I stack the deck in my favor by posting multiple videos/week, expecting to get average performance on them all--most other flow arts channels put out less content but intend to get higher view counts on them.
3. Not all my videos are monetized. I’ve had my channel long enough that many of my older videos use music that is under copyright to another artist and thus not eligible for monetization. If I could monetize all my videos the situation would be at least slightly different.

So how do I make an income?

I post 8 videos a month and I make pennies on each one--how do I keep myself in business?

Well, one route is through merchandise. I sell poi and t-shirts on my website at http://drexfactor.com/store. I’m very fortunate in that my notoriety has allowed me to earn some income off my name through these products. It is still not a huge source of income, however, and though it is growing it is still not a livable income.

Another route is a comparatively recent one: crowdfunding/patronage. I’ve long been a fan of educational channels like CrashCourse, Minute Physics, and Numberphile and the approach I’ve seen each of these channels take in recent years is to take donations from regular viewers to help fund their production through platforms like the now-defunct Subbable and now Patreon. Feeling as though I fit into the niche of educational content that’s meant to be free and available to all, I’ve started a donation system on my own website at http://drexfactor.com/support and a Patreon profile at http://patreon.com/drexfactorpoi. Both of these efforts have met with very limited success, but at this point I pull in close to $200/month through donations, or roughly 5 times more than I do from YouTube.

Seriously, if you want to support me as an artist, sign up to donate to my work on one of these platforms!

Finally, I teach regular lessons in my hometown of Washington, DC and when I travel. Sadly, though, I have quite a lot of competition with YouTube of all things. The percentage of people who want to learn from a real live person when they have the option of viewing free videos on YouTube has definitely declined over the years. I recently gave up my weekly group class in DC because attendance was just too low to make it worth my while.

Here’s the thing with this last option, though: I agree with it. By making a video I can reach thousands of people all over the world, whereas a group class I can only reach the two or three people that walk in the door. In terms of impact, the videos are totally the way to go, but they’re also currently a total money loser. Again, if you want to support my work as an educator, the smartest thing you can do is sign up to give me a regular donation on Patreon.

So why do it?

Hopefully I’ve made my point now that regardless of the stars in your eyes, you’re not very likely to be able to start a YouTube channel and quit your day job (at least, not if you’re a flow artist--our community is still too small and seems violently opposed to people making an income off of it). But it’s a career path that I’ve chosen, so why?

The short answer is that it’s still the most fulfilling work I’ve ever known. I love creating a video and knowing that it’s going to help somebody learn something they’ve never done before. It might happen that day, months down the road, or years down the road. I’ve had hundreds of people walk up to me at events throughout the years to tell me that the content I’ve created helped them discover their love of poi or taught them a particularly difficult trick. I love the challenges of teaching things in a very limited medium, of making complicated things feel simple. YouTube is currently the best platform to explore that potential through.

If only it paid commensurate to the joy I experience using it, life would be perfect. Until then, I’ll continue exploring other income streams and taking satisfaction from knowing how my work is benefitting others.