Good news: online video star Hank Green has made around $2m of advertising revenue from the billion views of his videos over the last eight years. Bad news: he spent more than $4m making them.
Green isn’t downcast, though: he wants fellow YouTube creators to look beyond the current advertising rates on Google’s service, which he suggests are around $2 per thousand views (CPM, in advertising lingo), and turn to their fans for financial support.
In a blog post on Medium, Green outlined why YouTube is currently much less efficient at earning money from advertising than television:
“A 22 minute TV program is accompanied by 16 30-second ads, at an average cost of $25 per thousand impressions. That leaves us with a per-minute CPM of around $19. A 5.5 minute YouTube video monetized the same way would make about $100 per thousand impressions. After a billion views, that’s $100,000,000.
Green wants YouTubers to be aiming much higher, though: “If creators can climb their way to a $1,000 cumulative CPM, a person with an audience of just a couple of thousand people would be able to be a full-time creator.”
How? Crowdfunding.
This won’t come as a surprise to people who’ve followed Green’s career as one half of the Vlogbrothers with brother John Green, since the brothers launched their own crowdfunding service called Subbable in 2013, then sold it to another, Patreon, in March 2015.
Rising production costs made Vlogbrothers’ foray into crowdfunding an inevitability: they effectively produce TV-quality shows but with a fraction of the advertising revenue. Their SciShow and Crash Course YouTube shows are now funded by Patreon backers to the tune of, respectively, $16.4k and $25.9k a month.
Green sees crowdfunding as the key to expanding the range of shows on YouTube that are profitable enough for their creators to be able to make more of them.
“YouTube has helped people create at least three massive genres of cheap-to-produce, high-quality content that viewers really, really love. Video game ‘Let’s Plays’, style tutorials, and direct-to-camera monologues (which we in the biz call ‘vlogs’) all fill those requirements and all score billions of views per month.
Other content has been nearly impossible to make work. Narrative content has existed mostly as aspirational, money-losing, pre-pilot pilots for TV shows. Even content that TV people consider dirt cheap (like game shows, talk shows, and reality shows) is hard to produce with online video budgets.”
Green wants more YouTubers and production companies to aim for higher CPMs, which he compares to “just every viewer paying an average of $1 per piece of content. That’s not crazy; it’s iTunes”.
He described crowdfunding as a “just ask” model where fans of a creator or show will be happy to support it financially, if they’re given the chance.
“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 wrote.
“How can I create something that someone will watch and say, ‘I would feel better if I had paid for that.’ That’s a different sort of content, and it especially encourages small-scale niche content.”
Crowdfunding on sites like Patreon is just one option for online video creators in 2015, however.
Newly-launched service Vessel is hoping to persuade viewers to pay a $2.99 monthly subscription in return for getting new videos at least 72 hours before they’re made available for free on YouTube, and has signed up a number of prominent YouTubers to try the model.
Another US startup, Victorious – co-founded by YouTube’s former head of creator development and management Bing Chen – is planning to launch apps for YouTubers including comedian Ryan Higa and boy-band Boyce Avenue, to boost their incomes.
Meanwhile, YouTube itself is working hard at drumming up more money for its creator community, with an initiative called Google Preferred that sells bundles of advertising across its most popular channels to big brands, with the aim of driving rates higher.
YouTube is also planning a new round of investment in popular and emerging channels. “We’ve decided to fund new content from some of our top creators, helping them not only fulfill their creative ambitions but also deliver new material to their millions of fans on YouTube,” wrote head of YouTube Originals Alex Carloss in September 2014.
Carloss has since said that the latter initiative will launch by the end of 2015 with plans to “fund beyond what they are typically able to realise”. YouTube is also dabbling in crowdfunding, with a “fan funding” feature available in some countries for viewers to digitally tip creators.
Hank Green isn’t convinced that the latter will be a success – “as it’s not part of the traditional culture (and it relies on Google Wallet) no one really expects it to catch on” – but the overall picture is optimistic: YouTube ad rates, whether they increase or not, are far from the only potential source of income for creators in 2015 and beyond.
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