Alright it’s time to do what every youtuber ever does when they gain even a modicum of
notoriety on the platform and talk about how much MONEY I made doing it.
Thanks to a few of my video’s taking off this channel gained 100,000 subscribers and
over 5.5 million views within a month.
I hope it goes without saying that I am incredibly grateful to everybody who has watched my videos,
subscribed, left an encouraging comment or even pointed out area’s where I can improve.
But with that sappy bullplop out of the way, all regular viewers of the channel will know
by now that I hate dragging out an answer to a simple question just to get you to stick
around so, $29,000…
I made $29,000 in the month that my channel “blew up” as the kids say.
Now there are some really interesting things that I have discovered in this period of rapid
growth, and some concerning trends which will likely mean that this gravy train is coming
to an end very soon, not only for my channel, but for almost every channel on the platform.
These big red flags are,
How revenue is actually generated by content creators.
The proliferation of adds for… “questionable” … products.
And the rise of alternative platforms.
So it’s time to learn How YouTube Money Works to give you a behind the scenes look
at this channel and how it made a thousand dollars a day, but also to make predictions
about the future of this site as a whole….
…
So the most obvious factor to at play here is the rise of alternative entertainment platforms.
For most of the last decade YouTube has been unrivalled in the consumption of online video.
Still to this day it is by far the most popular entertainment platform in the world, but it’s
NOT the only option anymore.
Paid services, open streaming platforms, alternative video sites, and even creator dedicated services
like nebula which are advertised by YouTubers who would have otherwise made content exclusively
for… well…
YouTube.
These alternative outlets means that YouTube has lost a lot of its negotiating power in
three distinct markets, the market for viewers, the market for creators and of course the
market for the all-important advertisers.
A content creator focused on video games would be split between YouTube and Twitch, and they
could only really concentrate on growing their audience on one.
A beauty influencer might pay more attention to Instagram or even TikTok and even nerdy
finance creators like myself might consider going after an audience on Facebook.
We have all seen the headlines of major influencers being signed to specific platforms for massive
sums of money, and this trend is likely to continue into the future, remember that for
later because it is really important.
In the same way, viewers have more choice in where they go to spend an afternoon ignoring
their responsibilities.
Server hosting is only getting cheaper as technology improves and giant companies are
often not brought down by equally giant competitors, but rather by lots of small players that each
compete in a specific niche better.
Also I know, I know, YouTubes revenue trend looks like “this”, so maybe they will
be able to balance out this new competition with the fact that more people are turning
to the internet for a bulk of their entertainment.
And look, this pressure is already having an impact, whether you love them or hate them
YouTube really has pushed out a lot of new features in the past five years as they attempt
to once again be the one stop shop for video content.
Streaming platforms release on demand content, YouTube releases movie rentals…
Twitch becomes the go to hub for live streaming, YouTube releases their own streaming platform…
Tik Tok turns into a global machine to turn talentless lip-syncers into “celebrities”,
there is YouTube a few months later with shorts.
Even if the competition isn’t hurting their bottom line yet, it’s certainly keeping
them on their toes… which is great, you might not love these features, but they are
there if you decide that you do, and they probably wouldn’t be there if it weren’t,
for competition….
Alright, rant over, let’s get into what your all here for…
THE MONEY.
So the channel made almost thirty thousand dollars and there are few key takeaways for
how this was possible, but there are also a few things that I did terribly wrong.
The first big mistake I make is giving away the answer at the beginning of every video
because YouTube rewards watch time above all else.
If someone clicks on your video the almighty algorithm wants to make sure that they are
watching it for a long time.
This is tracked as the average view percentage, EG how much of the video does the average
person watch.
This is an effective tool for weeding out the most egregious types of clickbait.
If someone posts a vid titled “Kanye West challenges Mr Beast to a rap battle” it
would probably get a lot of clicks, it certainly hits all the right buzzwords.
But if the video is an obvious troll then people are only going to watch the first few
seconds before clicking away or leaving the site all together.
YouTube really does not want this because as soon as you leave the site you are no longer
a pair of eyeballs that they can charge advertisers for access to.
So these video’s with terrible average view durations get hidden.
The opposite is also true, a video that makes everybody watch the entire way through is
normally the sign that it is very entertaining, and if nothing else it gives the site a longer
chance to throw up a few more adds.
This has become the new arms race, it’s not good enough to get people to click a video,
you have to keep on baiting them to watch longer and longer.
The best way to do this is to make really engaging and entertaining content, or if that’s
too difficult you can make the audience wait seven minutes to see the result of an eight
second drag race.
Whatever you do don’t give away what everybody clicked onto the video for right at the beginning
of the video, but F___ it, be the change you want to see in the world right?
I hate it when video’s needlessly drag out a simple question so I’ll be damned if I
do it.
This watch time arms race also means there has been a consistent trend to make longer
videos.
So if you want to make it on YouTube you gotta learn to drag shin out a little bit… or
a lot.
I have very much failed at this, for the same reason as before, if I can make my point in
10 minutes, I’m not taking 20 minutes to do it just to cram some extra midrolls in
there.
I know… what a dumbass I am…
The final and potentially biggest mistake I made was paying to promote my content early
on.
Turns out if you pay for a whole lot of adds to promote your own video’s most people
are only going to watch them for as long as they need to before that skip button comes
up.
The video’s I initially paid to promote got tens of thousands of views but only averaged
around a 10% average view through rate, this meant that YouTube basically ranked them as
complete trash and would never organically recommend them to someone who might want to
watch them rather than just being forced to watch them.
This mistake was actually so bad that I had to entirely REBRAND the channel… (only the
real OG’s will remember Compounded Daily) so lesson learnt I guess, organic growth beats
paid growth every time.
Now despite all these teachable mistakes there were a few things I did right, I had a decent
library of content before I started gaining a lot of views which meant if a new viewer
decided that they liked my content they could go and watch a whole bunch of similar videos
straight away.
Had the channel taken off after I had only produced one or two video’s then new viewers
wouldn’t have had the opportunity to “binge watch” my content, which means less views
overall, and it also means the average views per viewer would be lower which is another
key metric that the YouTube algorithm looks for when deciding which channels to put in
their recommended tabs.
What this means is if you are trying to build a channel but you are getting frustrated spending
hours upon hours making video after video all to get no views, don’t think of it as
a failure, think of it as piling up more wood so a fire can burn stronger once a flame does
actually catch.
Or I don’t know maybe this is just survivorship bias who can say.
The other thing I did right was being an American content creator that primarily appeals to
young American professionals that are highly sought after by advertisers.
It’s no secret that this particular content niche is particularly lucrative on YouTube
and a similar amount of views my channel might make five times as much money as on a gaming
channel.
But why is that?
You might think it’s because young professionals from America, the UK and Canada have the disposable
income to afford the stuff that advertisers will pay top dollar to advertise, and that’s
certainly true.
But there is another reason why finance channels make more money than almost any topic on YouTube,
and it’s the same reason why I really don’t see this all lasting much longer…
The scams…
There is a good chance that before watching this video you were presented with an add
from some shmuck with a whiteboard telling you about how they have trained hundreds of
students who are now making hundreds of thousands of dollars a month by trading forex, or automating
amazon, flipping houses or whatever other bullplop flavour of the month buzzwords they
can string together to try and convince you to “buy there course”.
These scummy advertisers will target the crud out of finance channels because they know
that the average person that watches these channels will be interested in business but
still at a place where they are only just learning about it.
YouTube has repeatedly been in hot water for allowing this practice, but in their defence,
it is difficult to vet EVERY SINGLE advertiser that appears on the site, especially when
they intentionally work in “legal grey area’s”.
It also gives YouTubers a difficult decision to make, turn on adds to get paid for the
content they put a lot of time and effort into producing or turn them off and rest easy
knowing they haven’t exposed their audience to these truly harmful practices.
In the interest of full transparency, I keep the adds on…
I hope to one day make this my full-time job, and while I made crazy money last month it
has already slowed down a fair bit and it won’t last me long at all if I were to turn
these adds off.
I just hope that my content does more good than harm in teaching people about what these
sleezy salesmen are up to.
What would be a fantastic solution to this problem is to give content creators the same
kind of power to chose who can advertise on their videos, as the advertisers have over
who can advertise on them.
Wishful thinking maybe, but it would certainly help me sleep better at night.
Now if you are smugly sitting there with you ad blocker running, don’t think that you
completely avoid this problem…
Sponsored adds, as in the adds that are read by the actual content creator have become
a lot more common, but they also bring with them a similar set of problems.
My good friend Richard over at the plain bagel recently made a fantastic video about how
he was offered THIRDY THOUSAND DOLLARS to promote a dubious crypto scheme on his channel.
Now Mr Bagel obviously turned that down, but he admits himself that was not an easy decision
to make.
That could easily be more than some people make in a YEAR, all for reading a script for
thirty seconds and publishing it to the internet.
The damage would inevitably be greater because people inherently trust the personalities
they subscribe to over some skippable add at the beginning of their videos.
I can report first hand that since my channel has grown in popularity the business email
that I set up for the channel has been inundated with similar requests.
But I made a decision, obviously I would never work with an advertiser that is an outright
scam, but I have also decided not to work with any advertisers that I don’t personally
use myself.
So no VPN’s that promise to act as a virtual rubber protecting your precious data, (spoiler
alert, that’s not what VPN’s do), No free to play mobile games that inevitably slap
you with endless microtransaction. and f___ing nothing to do with any f___ing companies peddling
anything to do with any crypto bullplop.
Instead I am just going to promote my channel memberships and my patreon, both are exactly
the same, they both cost $2 a month and they both have the same perks, an extra video every
month, 24 hours early access to all the new video’s I make and the ability to vote on
what topics I explore in the upcoming month.
Pick whichever one takes your fancy if you think this is worth it.
If you don’t, that’s totally fine, but hopefully this will allow me to spend the
time and effort that I would have otherwise wasted dealing with the demands of sponsors
and use it instead to create some extra content for the people who really enjoy it.
In a perfect world this would let me quit my job and focus on creating videos full time
with the assurance that the whole thing won’t come crashing down when YouTube is inevitably
forced to kick the scammers out of their add program.
And if you are thinking to yourself, hang on did this guy just subtly flex about making
30k in a month while asking for more money all in the same 12 minute video?
Yes, yes I did, welcome to YouTube, you must be new here.
Now go watch my video on how those Omaze giveaways work as little more than thinly veiled casino’s
with terrible odds, it’s a win win, I get higher average views per viewer statistics
and you get to partake in torpedoing any last hope I had of getting a sponsor on this channel.
Enjoy…
Oh and for a slightly less sarcastic video next week make sure to like and subscribe
to keep on learning how money works.