YouTube generates revenue of more than 10 billion USD annually without uploading a single video of its own. All the ads which you may find irritating are just another way by which YouTube earns money.
How YouTube Make Money Without Uploading Anything?
Some known factors through which YouTube earn money/revenue:
- Advertising market (main source)
- By selling their own product
- Superchat (Yes!)
- Merchandise
- Channel Membership fee
1. Advertising Market:
I know there's a minimum criteria after which a YouTuber can earn money, the uploader may be getting anything ranging from a penny to more than a thousand dollars monthly while some of the top YouTubers earn like a hundred thousand dollars or even more. In this platform, there are three kinds of people involved in the business.
One is the person who upload video, another person is the advertiser who pays money to YouTube to play their ads between videos, the last person is from YouTube who pay a fraction of money to the person who has uploaded the video.
YouTube has a pretty good algorithm and at the same time, it has a slight edge just because the majority of the people use Google products (Google search, Chrome, YouTube).
And by this way, YouTube can show you ads that are very much related to the queries you search on Google search engines.
How ads are the major source of money/revenue for YouTube?
The money generated by ads that you see on the front page of YouTube is taken by YouTube, whereas the money generated by ads on individual videos is shared between the creator (individual) and YouTube.
YouTuber (creator) earns around 60-70 percent of the total money while the rest is kept by YouTube for itself (it's a business!).
Although only 30-40% of the total share is kept by YouTube, but still it's the major source of revenue.
YouTube is a platform with more than 2 billion users so there's no denying fact that YouTube earns a pretty good sum.
2. Selling their product:
YouTube sells its own product known as YouTube Premium with the price as low as 1.8 USD in countries like India and as high as 11.9 USD in countries like the USA (these are monthly prices).
This product allows the video to run even in the background while you are working on another app.
Though you can use a split-screen floating app without getting the product (sorry if you have bought the premium just to use YouTube in the background, lol).
Moreover YouTube Premium removes all the annoying ads.
Yeah, they sell this product to remove their main source of revenue which makes watching YouTube even more comfortable and less distracting.
More than 20 million users have YouTube premium and YouTube Music.
3. Fraction of money taken from Superchat:
I hope you know what Superchat is. If you don't know, Superchat is feature which allow users to pay some money to pin or highlight their comment on live streams.
The share fraction between creator and YouTube is similar to that of advertising.
YouTube creator get around 70 percent while YouTube keep the rest of 30 percent with them.
Suppose a super chat is worth 10 USD then 7 USD is given to the creator while 3 USD is kept by YouTube.
That 3 USD for YouTube is nothing but there are about a million users or at least ten thousand users who use superchat monthly.
4. Merchandises:
No, YouTube doesn't take any share when a creator links its online store to their YouTube channel.
But still, YouTube gets a slight edge because it stores the data related to the merchandise as well as the person who clicks on the link to redirect to that site.
In this way, YouTube stores the data of a user's preference.
Then it shows similar ads related to the user's preference (by YouTube) and the chance of that user to click the ads is pretty high just because YouTube has stored the previous data in which that user clicked the merchandise store.
Cost per click (clicking the ad) adds more value to revenue than cost per thousand impressions (watching the ad).
Cost per thousand impressions refer to the revenue generated per thousand viewers while cost per click refer to a viewer who clicked the ad.
5.Channel Membership:
The share between the creator and YouTube is similar to that of advertising and superchat.
Once a user-pay an amount of money to become a member of the channel, 70% of the total money is received by the channel owner or creator while the rest of 30% is kept by YouTube.
Conclusion
I must say that how beautifully YouTube has designed the system to get more revenue for their brand improvement and further investments. YouTube will definitely build more ways to increase its revenue directly or indirectly by upgrading the features.