Some of us may never have heard them but there are a generation of youngsters who make a fortune on YouTube with their videos – in some cases more than the highest paid stars on TV. Take Felix Kjellberg, a 26-year-old Swede. It’s almost certain that you’ve never heard of him under his real name. But Kjellberg, or PewDiePie as he is known on YouTube, made £10 million in pre-tax profits last year. PewDiePie’s channel may not to be everyone’s taste – as it is filled with profanity – but more than 40 million people are loyal subscribers, logging on every day to watch him play video games.
It is those 40 million subscribers that advertisers are so keen to reach and so Kjellberg and YouTube are able to charge a premium for brands to have their products featured in his videos. Kjellberg is not alone – last year more than 10 YouTube channels each raked in more than £2 million in pre-tax profits. The channels feature a mix of comedy, beauty tips, playing musical instruments, playing video games and what some might describe as plain old ranting.
Other megastars of YouTube include Ian Hecox and Anthony Padilla whose Smosh comedy channel pulled in £7 million before tax last year, Benny and Rafi Fine with a channel which comments on other channels making £6.5 million and Lindsey Stirling who made £5 million after turning to dancing and playing the violin on YouTube when she was turned down for a major recording contract.
Make a fortune on YouTube
So how did they do it? Is there a secret about how to make a fortune on YouTube – posting videos that thousands of other people might actually want to watch?
If you think you are a budding star, have a talent that others might want to see and are ready to make a start, this is how you do it:
You need to sign up to YouTube’s partnership programme which is aimed at people who regularly upload videos and attract large audiences. Signing up to this means that you are entering into an agreement with YouTube which will see you share in the revenue generated each time that users watch your videos. You’ll have to agree to YouTube placing what it deems are relevant adverts alongside and, sometimes, within your videos. The videos then earn money based on a number of impressions (how many times people view the video) and clicks (each time that a user clicks on an advert). The most lucrative form of advertising is so-called pre-roll marketing where a video advertising message starts playing before the YouTube user has done anything. These are lucrative because they are highly unpopular and difficult to stop before the user has watched a certain number of seconds or minutes.
It’s difficult to quantify how much money you will make because revenues vary dramatically. YouTube says that its partners will always get the majority of the revenues generated from advertising.
There are 20,000 YouTube partners globally and while YouTube refuses to disclose how many there are in the UK, it does say that the number of British partners making more than £6,500 a year has risen seven fold over the last 12 months.
There are no restrictions on becoming a YouTube partner other than you must upload original videos regularly and these must be seen by thousands of people. YouTube says that you cannot use other people’s videos or incorporate bits of them in your productions unless you have permission to use them.
Other ways of using YouTube to make money
If you don’t have a standout musical talent, aren’t a hilarious comedian or a computer games addict, there are other ways to make money by posting on YouTube:
Drive traffic to your website. Start using YouTube’s Creator Playbook which will allow you to re-purpose some older content into videos as well as creating new ones. Link the channel to your website and start funnelling YouTube traffic to where you know that clicks or impressions generate ad revenue.
Promote your products on YouTube. These might be apps, music, fashion or e-books. Use an e-commerce solution like Shopify or Woocommerce and then set up a YouTube channel to promote it by showcasing the things you make.
Sign up to an affiliate marketing programme. With this, you’ll sell other people’s products for a commission. Amazon and eBay offer two of the biggest affiliate schemes. Then start reviewing these products on YouTube or create “how to” videos based on them.
Oliver Jones has written for Solution Loans since 2015. His passion for personal finance comes through in the 150+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read more about Oliver Jones