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How YouTube stars become millionaires

Diane Hall

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It can seem too good to be true to those on the outside looking in. A young guy or girl creating videos from their bedroom, with just their iPhone, earning the kind of money most of us can only dream of.


‘It’s not a proper job!’ my husband often says—a skilled tradesman who does back-breaking manual work more than 40 hours a week. ‘How do they make so much money from just posting videos?’


That’s a question a lot of ‘oldies’ would like to know. How does someone who films themselves pulling pranks on their friends or performing a few trendy dance moves in their bedroom become a millionaire?

Logan Paul "File:Logan Paul (48086619418).jpg" by Erik Drost is licensed under CC BY 2.0

Logan Paul "File:Logan Paul (48086619418).jpg" by Erik Drost is licensed under CC BY 2.0
PewDiePie at a press conference

Logan Paul

PewDiePie

You read that correctly…a millionaire. Those influencers who are household names, such as PewDiePie, Logan Paul and Shane Dawson, certainly aren’t skint. PewDiePie’s net worth is currently $40 million; Logan Paul’s wealth amounts to $25 million and Shane Dawson’s content earns him $12 million a year.


You may never have heard of any of them, but no doubt your children have.


So, how do these YouTubers amass such staggering fortunes?


There are a few different revenue streams that these content creators implement.


Adverts

The most obvious is the placement of adverts on their channel. If someone is regularly reaching and engaging a large, specific audience, it makes sense for brands to place adverts that target this same section of the population, alongside the YouTuber’s posts. The brand pays YouTube for the privilege, who apportions a percentage of this fee to the content creator in question.


Affiliation

A similar method is to take advantage of affiliation. If a cyber-star promotes an affiliate product—perhaps they believe it will appeal to their followers or it’s something they’ve personally used—this is of huge benefit to the company that makes it. It’s more than a simple advert, it’s an endorsement of the product, which carries much more weight.


The most successful YouTubers are like gods to their followers, who would gladly purchase a product or service because their hero likes it/uses it too. Through an affiliate link or code, the YouTuber receives a small percentage of each sale following their endorsement.

Picture of upload info regarding paid sponsorship

Picture of upload info regarding paid sponsorship

Sponsorship

On a similar note, social media stars are often approached by sponsors, who pay them to promote their company’s products. This may be in the form of a direct fee or they may choose to sponsor one of the influencer’s events.


With any form of third-party promotion, it’s wise for the YouTuber to carefully choose who they work with and how that company aligns with their values. If they were to snap up every promotional opportunity, the fan base they’ve spent so long crafting could feel they’re simply being seen as cash cows. Transparency, honesty and consistency are vital.


As a platform for video, YouTubers create numerous clips for their channel. Whilst it may be tempting to simply fill their time with adverts for their sponsors, if they don’t post an equal amount of content their fans typically enjoy and expect, their audience could shrink—which, in turn, would reduce the number of sponsorship/paid opportunities available to them. It’s a vicious circle, and it takes a lot of hard work to keep a large following once accumulated.


Tips

Platforms such as Patreon allow YouTubers to directly ask their followers for donations or tips, in appreciation of the content they provide. YouTube doesn’t yet have a direct donation facility.


Products

Whilst promoting other people’s/companies’ products can bring in revenue, there’s much more profit to be earned by popular YouTubers if they flog their own. Fans race to purchase T-shirts with their hero’s image, logo or strapline. The merchandise a YouTuber can shift via their channel and at meet-and-greets/in-person events could equal significant revenue.


To older generations, aspiring to be a YouTube star may not appear to be a good career choice, certainly not a stable career. Because it’s so difficult for social media influencers/personalities to remain relevant, there is likely only a short window of time that a top YouTuber can make serious money from posting content. However, if handled well, the income they receive can be invested and/or used to launch other businesses/brands within the media industry that make use of the talents these stars certainly hone.


Because social media as a whole is still relatively young, it’s hard to know how long PewDiePie’s influencer career may last, for example. He has been a household name for at least a decade—who’s to say his star won’t stay lit for the next few decades?

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