How YouTube Monetization Works?

After a stellar year, YouTube reported that it generated a whopping $28.8 billion in 2021. None of this success would be possible without rewarding the creators that make it happen.

This is why YouTube has rolled out several ways for creators to make money on the platform. The most common method of making money is when viewers watch an ad as it interrupts the video. Let’s go over the details.

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Join the YouTube Partner Program

YouTube Partner Program provides creators with a gateway into YouTube’s monetization features. It’s where you go to access various resources and tips.

There are a few eligibility requirements you have to meet; these are:

Live in a country where the partner program is available.
Be in good standing with the YouTube community with no violation of community guidelines
Accumulate at least 4000 watch hours in the last year
Have at least 1000 subscribers
Have an AdSense account

In other words, you have to demonstrate proof of popularity. There’s no point in joining the partner program if the channel isn’t doing the bare minimum.

Top earning YouTube stars can pull $20 million a year. The vast majority of content creators will earn far less, or not at all. This is a numbers game. And those with the most viewers and subscribers get the lion’s share of YouTube revenue.

And as the old saying goes, the house always wins. This means YouTube will always take a cut of the advertising revenue. 45% to be precise and the creator gets the leftovers.

This isn’t a bad deal when you think of all the resources that go into maintaining the world’s second-largest search engine.

Earnings for most YouTubers greatly vary based on the genre. Success on YouTube comes down to two things:

Understanding what the audience wants
Playing to the tunes of the algorithm

At the time of writing, the algorithm is pushing YouTube Shorts. Creators should make videos for both formats.

A good idea is to make short snippets from larger videos and upload them as YouTube shorts.

Note that YouTube has a criteria for the type of content that can qualify for ad revenue. Videos that contain adult content, violence, and foul language will not have ads placed in them.

Some YouTubers get around this restriction by using abbreviations of trigger words to get the point across. We do not recommend making videos in a controversial niche at all.

Verify Your YouTube Account

It’s relatively easy to verify your YouTube account. Here are the steps you need to follow:

Visit your YouTube channel and click on “Manage Videos”
Under the Settings section, select Channel and choose “Feature eligibility”
Now select “Verify Phone Number” and choose one of two options (text verification or a call)

You will receive a code to verify your phone number. Enter the code that you received, and that should be it.

Next up is signing up for the YouTube Partner Program. If you meet the requirements, you will find an option called “Monetization” in your profile.

The next step is to connect your AdSense account to get paid. You can use one that is already approved. If not, you can create one.

Check out, YouTube vs. Twitch

How YouTube Monetization Works

YouTube provides you with several methods of monetization in California to get paid. Let’s discuss the most popular options.

Ad Revenue

Companies place ads on YouTube through the Google Adsense network. These ads are then placed in your video.

Every time someone watches an entire ad, you get paid. This is the gist of things.

The ads can be placed before your video starts. This is known as pre-roll ads and is very common in monetized videos.

You can enable mid-roll ads if your video is 10 minutes long (or more). Your viewers may see a combination of ads such as:

Overlay ads (they usually appear on the lower 20% of your video)
Skippable video ads (inserted before,, during, or after your video)
Non-skippable video ads (inserted before, during, or after your video)
Bumper ads (these ads are inserted before your video)

Channel Memberships

You can offer channel memberships if you have a sizable following (over 100,000 subscribers). This is a great way to earn revenue for creators with many subscribers.

To qualify for Channel Memberships, you will need more than 30,000 subscribers. That’s quite a few people, so you have your work cut out.

We recommend uploading videos with every day regularly with high-quality content. Listen to your audience’s feedback and try to offer them what they want.

Top YouTubers can earn as much as $50,000 monthly from Channel Memberships.

Merchandising

Merchandising is ideal for gamers, influencers, and journalists. As an established YouTuber, you also have the option to sell your merchandise.

These include apparel, backpacks, gear, clothes, and other cool trinkets. YouTubers with a good brand have more opportunities to increase engagement with their viewers.

YouTube merchandising is available to creators with over 10,000 subscribers.

Super Chat

This is a very popular option if you have many followers tuning into your livestream. Fans who want to get your attention can donate to avail Super Chat.

This will place their message above non-paid messages. The more someone pays, the longer their message stays at the top.

Use this opportunity to give your loyal fans a shout-out. This will incentivize others to spend money to compete for your attention.

Creators raising money for a specific campaign can also use this option. SuperChat is available to all members of the YouTube Partner Program.

YouTube Premium

YouTube Premium provides you with another stream of generating some extra revenue. This option is best suited for creators with a sizable following on YouTube.

Sometimes, fans don’t want to watch videos. They are usually willing to pay a small fee to be exempt from watching ads on your channel.

YouTube Premium provides a win-win scenario for both creators and fans. Creators get to increase their revenue on YouTube. Fans can expect fewer interruptions on YouTube.

YouTube Shorts Fund

YouTube launched a whopping $100 million for creators who use the Shorts format. Money from the fund is distributed every month to YouTube shorts creators.

You can make anywhere from $100 to $10,000 depending on your video’s number of views. And if you don’t qualify for the fund, you can always try again next month.

The best part is, you don’t need to be part of the YPP program. You still have to meet certain eligibility requirements to qualify for the YouTube shorts fund.

Check out, YouTube vs. Spotify

How to Make More Money From YouTube (outside of YPP)

Monetization in California is just scratching the surface of your earning potential. The fact is, most YouTubers don’t rely on ad revenue to make money.

Instead, they are looking for lucrative sponsorship opportunities and affiliate programs. Here are a few ways of making money outside of YPP.

Open Your Own Fashion Line

You can sell your products if you have a sizable following on YouTube. A popular option is to open fashion lines.

You can collaborate with clothing manufacturers and designers to supply you with the finished product. From here, all you have to do is create an online store.

You can place a link to your fashion store in video descriptions and sponsor your products.

The benefit of having your fashion line is that you get nearly all of the cut. Of course, you still have to pay vendors who have supported your business and payment processors.

But other than that, the lion’s share of the revenue is for you to claim.

Work With Sponsors

This option is similar to launching your fashion line, except you’re sponsoring someone else’s products.

A sponsor can greatly supplement your earnings from YouTube. Most brands are eager to pay well to creators with large audiences.

The larger your subscriber base, the more likely you are to achieve a brand’s business objective.

Note that some niches have more opportunities for product placements than others. Fitness and beauty channels are massive categories that allow product placement.

If you make videos on fitness, you can supplement companies that sell protein powders, creatine, and multivitamins.

If you’re a fashion adviser, you can sell shampoos, shavers, perfumes, watches, and so much more.

Here are a few tips to maximize your earnings from sponsorships:

Ask for a small percentage of the sales proceedings
Create a few unpaid review to get more sponsors

Affiliate Programs

YouTubers who have a small following may struggle to get sponsorships. The next best alternative is to work on an affiliate program.

For example, you can place an affiliate link to workout equipment and supplements you use. Careful not to overdo this. And never advertise a product that isn’t in your audience’s best interests.

As an online influencer, your biggest asset is your reputation.

Sell Online Courses and eBooks

A popular way of generating a reliable income is by selling online courses and ebooks. This only works if you have a good standing in the community.

If you have access to knowledge that can help your viewers, why not package it into a course or ebook?

There is a wide range of topics you can work on. Examples include professional courses (such as video editing), fitness, marketing, and programming.

Offer Professional Services

Many viewers seek professional services such as graphic designing, video editing, and programming.

However, they may not have the skills to perform them and/or the budget to hire a full-time employee.

If you have a talent for certain services, show them off on YouTube and interested viewers can contact you for your services.

This is a popular option among fitness coaches who provide consultancy services to viewers worldwide.

You can increase the price of your services based on the popularity of your services. You can increase your fees if you receive thousands of requests for your services daily.

Patronage

YouTubers with a loyal fan base can leverage third-party platforms like Patreon to earn more money.

A good option is Patreon which lets YouTube creators offer exclusive perks to viewers who like their content.

For example, you could upload a teaser trailer on your YouTube and promise the full video on Patreon for a small fee.

You can also offer tiered memberships for exclusive content such as behind-the-scenes footage, consultancy services, and early access.

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A Look at the Highest Earning YouTuber

According to the BBC, the top earning creator on YouTube is Mr. Beast. The young creator continues to provide fresh content to his audience.

For example, his new videos inspired the Netflix hit show Squid Game. What stands out most about MrBeast is the effort to make his videos.

From the microphone to the video quality and everything in between, MrBeast’s channel pulls no punches when it comes to quality control.

Perhaps more importantly, MrBeast has capitalized on the popularity of his channel by launching several businesses.

He founded MrBeast Burger, a virtual restaurant that has over 1,000 kitchens around the world.

MrBeast recently opened a physical location with thousands of fans showing up to buy a burger.

So what’s the secret to MrBeast’s success?

Besides using his alluring personality, MrBeast creates what is known as ‘hero content’. This content uses data-driven research to lure as many potential viewers as possible.

Examples of this type of content include:

Fortnite donation series (capitalizing on the success of Fortnite)
Building a house out of Legos (who doesn’t like Legos?)
Elaborate challenges and massive giveaways

Giveaways allow MrBeast to lure in massive crowds who are curious to see how much money he’ll donate this time. This keeps audiences on their toes.

Wrapping Up

Take hints from other YouTube creators in the same niche. Invest in more high-end equipment such as microphones and cameras to capture high-quality footage.

And always do your research before making a video. Never cut corners when it comes to quality control.

Listen to your audience and give them what they want. This is a numbers game so try to increase your view count. As long as you are persistent enough, you should be able to win on YouTube.