YouTubers aren’t supposed to talk publicly about how much money they’re making from advertising: it’s why they squirm and deflect when asked about it on-stage at conferences. Veteran online video star Hank Green has a strong stomach, though: he’s been blogging about his (admittedly notional) ad earnings following his one billionth view on YouTube.
“At the average YouTube ad rate of $2 per thousand views (a $2 CPM), that’s around $2 million in revenue from advertising over the last eight years. Not bad! Though, during those eight years, we have spent more than $4 million on the creation of YouTube videos. So also, not good!” he wrote in a post on Medium. Green also notes that TV’s per-minute CPM is around $19 in the US.
“A 5.5 minute YouTube video monetised the same way would make about $100 per thousand impressions. After a billion views, that’s $100,000,000. To be fair, YouTube would have taken 45% of that money, so really I’m only down $53,000,000…” Ouch. But the focus of Green’s post is something else: how creators can get to “a $1,000 cumulative CPM” so that those with even just a few thousand viewers could build a career.
Green’s point is that “advertising is inefficient” as a business model on YouTube. “The first thing to remember is that a $1,000 CPM (that seemingly unachievable figure) is just every viewer paying an average of $1 per piece of content. That’s not crazy; it’s iTunes,” he writes, before warning of the big challenge for YouTube – and online creators more generally: “We need people to pay for content, but we can’t make them pay for content.”
Green recently sold his crowdfunding company Subbable to Patreon, so it won’t surprise you to see that his solution is, essentially, asking fans to contribute. “What excites me most about the ‘Just Ask’ model is that it encourages a different kind of content. Instead of challenging creators to figure out how to get the highest view counts, creators have to puzzle out how to make the most valuable content,” he writes. Food for thought.