Please like and subscribe: is the YouTube business model sustainable?

By Renn Karageorgieva

There are about 100 hours of video content being uploaded to YouTube every minute – from educational videos to gameplay walkthroughs, from high-tech reviews to clips of failed proposals. Being a creator on the video platform is becoming more and more common, and for some talented and lucky people, it has become a full-time job. But is it a good idea to rely on YouTube for a living as it becomes a more prominent part of our everyday lives? Is YouTube a good place to build a business today?
When the website’s revenue-sharing model was introduced in 2007, and perfected in 2012, making money on YouTube was as easy as clicking on the ‘monetize’ button next to your video. As long as you had a couple thousand viewers, you had a guaranteed amount of money coming in and as your brand and popularity grew, so would your viewcount and, consequently, your income. 2011/2012, gave birth to a lot of Internet celebrities, some of which have since made a successful transition to traditional media: Grace Helbig is getting her own television show on a major American network, Phillip DeFranco has created his own company funded by the Discovery Channel, and John Green of the Vlogbrothers is a best-selling author with a blockbuster movie based on one of his books, with another one coming to theaters soon.
But all these people are so successful because, while they got started on YouTube and gained most of their popularity there, they are building a business outside of their channel. This is mainly because earning money solely from the content that you’re creating on the website is getting more and more difficult since the market is becoming increasingly saturated. In short, viewership is growing, but revenue isn’t – on the contrary, creators are earning less and less as more competitors enter the market.
Another reason for the change is the decreased cost paid by advertisers for their ads. According to Adweek, the average cost of a 30 second pre-roll is currently $7.60 per 1000 views – almost a third less than two years ago. And even if a youtuber does put an ad like this to run before their video, they would only receive this money if the viewer watches the entire ad and doesn’t click on the Skip Ad button. This makes for a very flawed and inefficient financing model as it is based on the traditional notion of television ads that you have to sit through to get to your desired content.
YouTube is still enormously successful for a company that has existed for 10 years – according to eMarketer, it earns an estimated 21% of all video ad revenues in the US and earned $5.6 billion in gross revenue worldwide last year. But if the video hosting platform wants to grow and expand, it needs an approach towards its content contributors and advertisers that fits the needs and the behavior of its target demographics. According to YouTube Analytics, 56% of its viewers are between the ages of 13 and 24; these are young people with short attention spans that will skip an advertisement if they can, and will not watch their chosen content at all if they cannot – just because, in most cases, they won’t feel like waiting.
As for the creators on YouTube, there is no guaranteed way to gain a wider audience other than consistency and quality content. Maybe the best option is to start building you brand on your channel and branching out from there; use your audience to gain support for your other projects and not as an automatic income source. Film a movie, write a book, organize an event, build a community outside of your channel. The best way to stay relevant in a medium that is literally constantly changing is to change and evolve with it.

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