Currently, YouTube is one of the most popular sites on the internet. Almost everyone around us is aware of its existence and how it works. A good amount of people online with their channels on YouTube focus on getting their accounts monetized so that they may have an active source of regular income.
How Does YouTube Make Money To Pay YouTubers?
However, have you ever wondered how this works? Where does this site get the money to pay the creators by allowing individuals to stream for free? If curiosity nags you just as much, then you are at the right place. Following is a list of key sources of revenue for YouTube:
AdWords And Video Advertising
The majority of the site’s revenue comes from Google AdWords. When you use Google or any of its products, a list of algorithmically generated sites is given to you. You may have noticed that the algorithm also tries to show relevant ads to your search and the relevant website. Those advertisements usually come from AdWords.
AdWords advertisements are widespread throughout almost all of Google’s web properties. You would need to outbid your competitors to gain the top spot in Google advertising. The higher the bids get, the higher your position becomes.
Hence, advertisers pay each time a visitor clicks on an advertisement displayed on the website. This particular click may be worth anywhere from a few cents to over $50, depending solely on the competitive search keywords. These terms may include Insurance, beauty, loans, fashion, books, etc.
YouTube views advertisements through an opt-in advertising program, namely TrueView. TrueView is based on two main types of advertisements: in-stream and video discovery.
The in-stream ads focus mainly on the viewer watching the first five seconds of the ad. However, the supplier only pays when a viewer has seen over 30 seconds of the total advertisement or has at least clicked over an entity related to the advertisement on the screen.
Further, Video Discovery ads focus on advertisement videos listed on the page alongside various other contents. The supplier only pays when the user clicks on one of these ads.
Together with Google Preferred, TrueView ads bring in most of its money at the moment. Google Preferred allows advertisers to pay for placing ads on the most streamed videos or exceptionally high-performing content based on the site.
Google added a monthly subscription service that lets users watch a version of YouTube without ads and watch videos only available to premium users. This was done to help YouTube grow even more. This service was introduced in the fall of 2015 as YouTube Red, intending to be a competitor to the premium service giant Netflix.
In May 2018, YouTube announced a rebranding. This entailed them announcing the launching a separate platform for streaming music, namely YouTube Music. YouTube Music offers music streaming free of ads, along with a premium tier that enables ad-free playback, audio-only background playback, and downloading songs to playback offline.
Apart from the above-listed initiatives, YouTube does have a few goals set for the upcoming year in terms of the expansion of its site. They mainly intend to crack down on in-video sponsorship.
Even though the videos are sponsored, and the brands are spending money on promotion, YouTube gets no revenue. The site hopes to force brands into creating premium ad channels rather than having famous internet celebrities work themselves out of YouTube’s approach. Nevertheless, this is a fairly risky move for YouTube, as it can drive content creators to rival platforms and bring more loss than profit to the site.
Another concern for YouTube is that users don’t usually explore their site as they traditionally do. This is mostly because of social media, where one can access almost all the content on YouTube and more.
Viewers watch embeds on other platforms and drop in to check out a singularly odd video without clicking around and browsing further. For this, the website plans to build a destination site that people will visit, allowing Google to monetize videos further.
How Youtube Makes Money: Conclusion
YouTube is a giant that earns mostly from user-generated content. It employs advertisement opportunities for brands to promote their content to generate active revenue. There are also several minor initiatives it has taken over the years to monetize its videos as much as it can. These initiatives include services like YouTube Premium and YouTube Music.