As far as I am presently aware, the true fact stands that YouTube is valued by multiple sources at around $100 billion, and they absolutely are taking a massive cut from content creators. Regardless of their exact numbers, the fact remains that they are taking a massive cut that could otherwise go directly to content creators, that absolutely, unequivocally makes the difference for many of those creators between profitability and operating at a loss.
With two small kids in my own house, I haven’t been navigating this new world as a theoretical challenge. My youngest, who is 2, can rarely sustain her attention to watch the Netflix shows we put on for my 5-year-old son. But when I showed her a ChuChu video, just to see how she’d react, I practically had to wrestle my phone away from her. What was this stuff? Why did it have the effect it did?
It helps, too, that the same young viewers who eschew television in favor of YouTube are bonkers for video games. “Ten to 15 years ago, gaming wasn’t cool. You didn’t game because it was cool, you gamed because you loved it,” says David Huntzinger, a digital-talent agent at WME. “Now you have Drake going on Twitch and playing Fortnite, and [professional] athletes in the locker room saying they can’t stop playing Xbox—it’s what these kids are living and breathing.”
Facebook and Twitter could pose new challenges to YouTube, because those social networks are creating their own video services. “If YouTube wants to move towards strong profitability, or to be profitable, they are gong to have to take that advertising and make it part of any actual programming,” Bajarin said. “And one way to have control over all that is to create their own content.”
Individuals and businesses make millions of dollars through YouTube advertising, but there are risks to using a platform controlled by another company. Not only is there a chance that a change in Google's search algorithms could make or break video traffic, but Google also takes a hefty 45 percent cut of revenue from video advertising. Nevertheless, YouTube is a massive platform and is the world's second largest search engine after Google, which includes YouTube videos in search results. If the benefits of reaching YouTube's large audience and having Google handle the most labor-intensive parts of building an advertising network outweigh the costs and risks, this platform is a great resource for turning videos into cash.
There are over a million members of the YouTube Partner Program. According to TubeMogul, in 2013 a pre-roll advertisement on YouTube (one that is shown before the video starts) cost advertisers on average $7.60 per 1000 views. Usually no more than half of eligible videos have a pre-roll advertisement, due to a lack of interested advertisers.
The tech conceit of starting with nothing and growing a business into being profitable sounds appealing. Who wouldn't like to minimize initial investment? But the successes have typically required hundreds of millions, if not a billion or more, of investment to ultimately succeed. And there are many ways in which the grand concept can fall short the way theory sometimes does when faced with the reality of application.
In 2013, the average cost per thousand (CPM) for YouTube was $7.60. CPM (cost per thousand) is an industry term that represents revenue per thousand views. In 2013, the average income for each YouTube content creator was $7.60 per every thousand views. A video with 500 views would have earned roughly $3.80. A video like Gangnam Style with a billion views would earn $7.8 million. Some videos earn a higher or lower than average rate depending on the video content. Videos containing copyrighted music do not earn revenue for the video creator, and some topics may not attract advertisers. Others have a strong draw from advertisers and drive up the CPM.
Five years on, ChuChu TV is a fast-growing threat to traditional competitors, from Sesame Street to Disney to Nickelodeon. With all its decades of episodes, well-known characters, and worldwide brand recognition, Sesame Street has more than 5 billion views on YouTube. That’s impressive, but ChuChu has more than 19 billion. Sesame Street’s main feed has 4 million subscribers; the original ChuChu TV channel has 19 million—placing it among the top 25 most watched YouTube channels in the world, according to the social-media-tracking site Social Blade—and its subsidiary channels (primarily ChuChu TV Surprise Eggs Toys and ChuChu TV Español) have another 10 million.
ChuChu’s founders aren’t blind to the power of new-media platforms, or the undertow of crappy YouTube producers, or the addictive power of devices, but the magnitude and improbability of their success more than balance the scales. They don’t quite seem to know why (or how, exactly) they’ve been given this opportunity to speak to millions from an office in South India, but they’re not going to throw away the chance. After all, there are so many stories to tell.
Conversely, YouTube has also allowed government to more easily engage with citizens, the White House's official YouTube channel being the seventh top news organization producer on YouTube in 2012 and in 2013 a healthcare exchange commissioned Obama impersonator Iman Crosson's YouTube music video spoof to encourage young Americans to enroll in the Affordable Care Act (Obamacare)-compliant health insurance. In February 2014, U.S. President Obama held a meeting at the White House with leading YouTube content creators to not only promote awareness of Obamacare but more generally to develop ways for government to better connect with the "YouTube Generation". Whereas YouTube's inherent ability to allow presidents to directly connect with average citizens was noted, the YouTube content creators' new media savvy was perceived necessary to better cope with the website's distracting content and fickle audience.
Most videos enable users to leave comments, and these have attracted attention for the negative aspects of both their form and content. In 2006, Time praised Web 2.0 for enabling "community and collaboration on a scale never seen before", and added that YouTube "harnesses the stupidity of crowds as well as its wisdom. Some of the comments on YouTube make you weep for the future of humanity just for the spelling alone, never mind the obscenity and the naked hatred". The Guardian in 2009 described users' comments on YouTube as:
Have you ever watched a YouTube star’s video and thought, I could’ve done that? Me neither. Out of all the influencer platforms, YouTube strikes me as the most intimidating. But it can also be the most lucrative, with top YouTubers earning well into the six figures from advertising revenue alone. And this pie is only getting expanding: YouTube recently reported that the number of users earning over $100,000 on the platform has increased by more than 40 percent annually; currently, 75 percent more channels have surpassed a million subscribers versus last year.
Merchandise has become an increasingly important revenue stream for these top digital stars, almost all of whom (No. 1 being a notable exception) are in their 20s and 30s. Each of the 10 on our list now has a line of merchandise, whose blossoming sales help account for that 42% income increase from a year ago. “I’ve built this huge community, and we’ve made a lot of people laugh,” says Fischbach, who sees Cloak as the first step toward an empire built on assets more tangible than video uploads. For now, though, all those gaming clips serve as a force multiplier for the man known as Markiplier. Like any savvy businessman, he’s thinking ahead. “I’m not going to be able to make videos on YouTube forever,” he says. “I need to plan for the future.”
YouTube allows users to upload, view, rate, share, add to favorites, report, comment on videos, and subscribe to other users. It offers a wide variety of user-generated and corporate media videos. Available content includes video clips, TV show clips, music videos, short and documentary films, audio recordings, movie trailers, live streams, and other content such as video blogging, short original videos, and educational videos. Most of the content on YouTube is uploaded by individuals, but media corporations including CBS, the BBC, Vevo, and Hulu offer some of their material via YouTube as part of the YouTube partnership program. Unregistered users can only watch videos on the site, while registered users are permitted to upload an unlimited number of videos and add comments to videos. Videos deemed potentially inappropriate are available only to registered users affirming themselves to be at least 18 years old.