How does youtube make money?

Where do you go to stream your favorite songs? Not audio but video? Youtube. In www, this is the second largest search engine. Cool, right. With the first youtube video being uploaded in 2005 by Jawed Karim, one of the founders, Youtube has come a long way.  It is now the world’s largest video sharing platform. 

Not only that from catching up to the latest videos of your favorite artist to finding random funny videos there is so much this platform has offered. Thanks to this platform, over the years many talented influencers have come to limelight. The Youtube community is large, so is the entertainment they offer with their content. Youtube has monthly active followers of 2 Billion, around 30 Million daily active users, and most importantly users spend on average 40 min on the site at a time. 

With its latest move, Youtube Premium, with this subscription you can play youtube in the background. Not only that you can have both Youtube and Youtube music ad-free. you can see that it is working towards taking over the music streaming market too. And it may work out well too, at the end of the, to watch any video people usually come to youtube.

Did you know?

Around 5 billion videos are watched every day on Youtube.

Around 1 Billion hours of video are uploaded every day on Youtube. 

Fascinating isn’t it.

If you think only youtube influencers have youtube channels then you’re wrong. From major corporations to celebrities, everybody has a youtube channel. Wondering Why? Everybody is familiar with Youtube, be it kids or older people. So if they like your work they will naturally follow and it is a great way to stay in touch.

Youtube Earnings

As you already know how famous this video sharing platform is, have you ever wondered how Youtube makes money? 

Come on, you would have been at least a little curious. If you’re, then you’re in the right place. Stick till the end to find out how Youtube makes money.

As most of you have guessed the major ways for Youtube to make money is Advertising. Before most of the youtube videos, there will be an ad. So you see that is where the main source of youtube comes from. This platform can embed targeted advertising before the video clips. So whenever a user watches the video they can promote the advertisement too. If the video is long they place more than one advertisement in between too. 

Youtube is an excellent platform and it offers people with all sorts of entertainment they’re looking for. Around 79% of people have a youtube account. So do you understand how many people are creating and consuming the content made on this platform? With this huge user base, it is impossible for businesses not to tap into. Don’t you agree?

The businesses advertise its advertisements on Youtube to reach their targeted audience which is working pretty fine for the platform. Because as of 2017, Youtube has generated around $9 billion in revenue. Since 2017, Google has stopped breaking down the amount of revenue its individual segments are making. So it is not known how much Youtube is bringing in.

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Advertisements 

The Youtube business model is an advertising model. It means that the product it is offering is its users. With 2 billion monthly active users you can imagine the number of people companies can reach. Another interesting fact is that more than 90% of people have said that they have found a new product or brand on Youtube. So don’t you think it is a great source for markets to promote their products? 

This is the main reason why 8 out of 10 marketers consider youtube to be the most effective video marketing platform. As you know the bulk revenue of Youtube comes from its advertising service i.e., Google Adwords. With Google Adwords, the advertisers can reach their target audience. For example, if you have recently searched for a particular brand of mobile on Google. You will see that the next time you open Youtube you will find advertisements relating to that particular product. 

There are three ways in which Youtube makes money through advertisements. Let’s discuss them one by one.

  • Embedded Advertisements
  • Landing Page Advertisements
  • Sponsored Videos

As mentioned above, an embedded advertisement is nothing but embedding advertisements before a video clip. This advertisement plays before the actual video and as you watch on this video they generate revenue. The short videos between videos also bring in income. Based on the number of people viewing the advertisement the advertisers pay money to Youtube and a portion of it goes to the creator of the video clip.

Next comes the Landing page advertisements i.e, the Youtube Homepage advertisements. Whenever you open youtube you will find a banner style advertisement that contains a picture and videos. The advertisers can advertise their product on the Landing page as it will reach more people and gain more attraction.

Lastly the Sponsored advertisements. Whenever you search for a particular video, you will find some paid ads. These videos are usually sponsored videos and the Youtube will receive payment from the advertiser based on the number of views the videos get after the ad.  

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Youtube Premium

Apart from advertisements, the second method that Youtube generates revenue with is Youtube Premium. Nonetheless, this Premium revenue model may work well for Youtube. With Youtube premium now the users can play Youtube in the background uninterrupted and most importantly both Youtube and Youtube music will be ad-free. And also the users will get their hands on the exclusive Youtube premium content. The subscription plans range from $6.99/month to $17.99/month. But the prices vary from country to country.

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Youtube TV and Channel membership

Although the advertisements are the major revenue sources for youtube thinking that is the only source is wrong. Youtube makes revenue through Channel membership and Youtube TV. Channel memberships allow the partners of youtube (YouTubers) to communicate with their audience deeply. This is a win-win situation for both Youtube and the Publishers, they can earn more from Youtube than just putting ads. With the channel membership, the publishers will get to add a join button and the subscribers who are interested to join will pay membership fees $4.99/month. The creators will offer special perks for these subscribers like discounts on merchandise, etc. Youtube takes 30% of membership fees.

Youtube TV is exclusive in the US. It is a live TV streaming service with which users can watch cable channels such as Disney, ABC, NBC, etc on youtube. This service lets you stream around 70 networks and comes with 6 different accounts at $49.99/month. However, some of the premium channels can only be subscribed after paying an additional amount. Every subscription comes with Chromecast and Youtube can be streamed on any device. This service is spreading fast and it is giving strong competition to other live TV streaming services.

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Affiliates Earnings

If users buy the products that are under the related videos the affiliate partners will pay commission to the Youtube. 

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Conclusion

Youtube is the second-largest platform on the internet. Every single day many people visit this platform to view videos. So it is the perfect opportunity for marketers to advertise their product. These are the ways that Youtube earns money.

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