August 30, 2014

YouTube Producers: Tough To Build Business on Ad Revenue Alone

youtube producers

With Google Ads Chief Susan Wojcicki the new head of YouTube, sources say the video site wants to start competing with TV for ad share. The trouble is, some YouTube producers, small business owners who share revenue for ads that appear on their videos, say they’re not making enough money.

YouTube launched its revenue sharing program in 2012. At the time, the site even gave a number of $1 million grants to producers to encourage them to make higher quality videos.

The strategy has worked for YouTube, which generated $5.6 billion last year in ad revenue. But some seem less happy.

For example, Olga Kay, who runs five channels on YouTube, told The New York Times recently she makes between $100,000 and $130,000 a year from her channels, but must invest a substantial part back into production.

Meanwhile, video producer Jason Calacanis told the paper:

“We were huge fans of YouTube, but we are not creating content anymore because it’s simply not sustainable. YouTube is an awesome place to build a brand, but it is a horrible place to build a business.”

Critics say part of the problem is the slice of revenue YouTube keeps for itself. A Variety report notes that revenue partners get 55 percent of ad revenue and YouTube takes 45 percent.

Others say videos are being loaded to YouTube so quickly, the site can’t sell ads fast enough, meaning too few ads are being spread too thin.

There’s also the concern YouTube is getting too little for its ads. Recent data suggests the site gets about $7.60 per 1000 views compared with $20 per 1000 on network TV.

This makes ads on YouTube a great buy but perhaps not such a great source of revenue for producers.

YouTube, of course, points to the fact that its parent company Google provides a 12,000 member global sales force which sell the ads on YouTube in the first place. The company also points to the investment in the technology that allows for the upload of high quality video.

But YouTube executives say producers seeking to make money from YouTube only may be going at things the wrong way anyway. The site is also a place to launch programming that might eventually lead to more profitable ventures in other markets.

They use as an example Awesomeness TV which started on YouTube, but now provides content for Nickelodeon on cable, too.

Video Photo via Shutterstock

4 Comments ▼

Joshua Sophy - Staff Writer


Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

4 Reactions

  1. Hitting it big in Youtube is difficult.The investment to produce quality videos that will draw viewers is much bigger than say creating quality content. This is why I think Youtube marketing should be done hand in hand with other mediums of online marketing in order to grow subscribers month after month.

  2. That’s true. That’s why with enough following, producers are now creating other products to sell. I’ve seen some take product placements while others sell actual goods. We cannot help that Youtube producers have to make a living.

  3. I agree. YouTube probably will never be a place to strike it rich but it definitely can be a place to get found.

    It’s hard to argue that you’re not getting phenomenal exposure from the site. I also think these numbers are likely to trend back upward. Eventually, Google will catch up on advertising sales once more companies get familiar with the idea of online marketing.

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