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YouTube Producers: Tough To Build Business on Ad Revenue Alone

Posted By Joshua Sophy On February 11, 2014 @ 3:30 pm In Marketing Tips | 4 Comments

youtube producers

With Google Ads Chief Susan Wojcicki the new head of YouTube, sources say the video site wants to start competing [1] 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 [2] 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 [3] 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 [4] which started on YouTube, but now provides content for Nickelodeon on cable, too.

Video [5] Photo via Shutterstock


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URL to article: http://smallbiztrends.com/2014/02/youtube-producers-ad-revenue.html

URLs in this post:

[1] competing: http://www.businessweek.com/articles/2014-02-05/goal-no-dot-1-for-youtube-compete-with-tv

[2] substantial: http://www.nytimes.com/2014/02/02/business/chasing-their-star-on-youtube.html

[3] report: http://variety.com/2013/digital/news/youtube-standardizes-ad-revenue-split-for-all-partners-but-offers-upside-potential-1200786223/

[4] Awesomeness TV: https://www.youtube.com/user/AwesomenessTV

[5] Video: http://www.shutterstock.com/pic-63799798/stock-photo-young-videographer.html