Why are there videos sprawling up on YouTube? Is it just for entertainment? What if you wanted to be a top YouTuber (which also means you’d be earning in millions)!
YouTube is just a social advertising site where famous you tubers get paid by AdSense and not YouTube! Monetization of YouTube is done by selling advertisements through AdSense.
To start with the basics, let’s take an example of Gangnam Style (PSY) which reached 100 million views in 2013, PSY made 7.9 million dollars out of the song and Google (which owns YouTube) made 3.8 million dollars. What happens is, Google gives 68% of the share to the publisher of the video and keeps 38% in its own pocket.
Normally after YouTube (or Google) takes their cut, YouTube creators make around 0.5$ to 1$ per 1000 views on the video. This calculated revenue, also known as CPM (Cost Per Mille (Thousand) views) determines how much you will earn depending upon the total number of views.
Now how does this work? This CPM is basically decided by the money-making heads (advertisers) as they check the average number of people watching an ad, as you already know that a video is generally complemented with an ad. Now, if you have 1000 views to your video and 30% people watch the ad before, you’ll have 300 paid views which determines your CPM. Basically if a viewer watches an ad, you get paid or Advertisers pay you (and Google) money if your viewers watch their ads.
Let’s assume that CPM is 10$ (which is very high from the average), if your video manages to get 1000 views, you’ll make 10$ out of it. If you get 10,000 views, you’ll earn 100$ and if you’re fortunate enough to get million views, you’ll make 10k dollars.
YouTube’s CPM on an average is 7.6$, meaning you get paid 7.6$ for each 1000 views. But the revenue to views ratio grows exponentially.That’s why the top 1% of the YouTubers get paid so much while the other 99% are usually stuck with $0.50-$ 1.00 CPM.
But wait, you don’t get to see an ad on each video you watch on YouTube, do you? Not all videos show advertisement. Plus you obviously will not like to spend your time watching some advertisement, you simply skip it. Eventually this affects the number of views because advertisers don’t count a view until the ad is displayed and watched.
YouTube reported that more than 1 million advertisers are using Google ad platform, YouTube has more than a billion unique visitors in a month and over 6 billion hours of videos are watched monthly. With such figures using YouTube, famous youtuber channels like PewDiePie, IISuperwomanII, CollegeHumor make millions.
As easy as it might seem, the road to making money on YouTube isn’t smooth. It takes plenty of time, patience and luck to see payout of any sort!