It’s time for YouTubers to diversify their revenue streams

Casey Neistat

By Simon Owens

Last month, the famous vlogger Casey Neistat uploaded a 15-minute video titled “DEMONETIZED DEMONETIZED DEMONETIZED.” In it, he pointed to a few recent examples in which his videos were designated as not suitable for advertisers. “I genuinely don’t feel YouTube does enough to take care and look after their community,” Neistat said at the beginning of the video before launching into his suggestions for how the company can improve its relations with said community.

If you’re the kind of person who subscribes to and follows YouTube channels, then you’ve probably noticed more and more of the platform’s stars making similar complaints. Philip DeFranco. H3H3 Productions. Vlogbrothers. All have uploaded videos about what they’ve dubbed the “adpocalypse” and how many of them have seen their YouTube ad revenue wiped out.

The adpocalypse, if you’re not familiar with the term, started earlier this year when several media outlets discovered that YouTube was showing pre-roll video ads on channels that were publishing extremist, hateful content. After some of the world’s largest ad buyers temporarily paused their ads on YouTube, the company quickly rolled out an algorithmically-driven vetting system that would scan a video and determine whether the video was deemed “safe” for ads.

As can be expected, this led to some YouTubers waking up and seeing their advertising revenue decimated virtually overnight. And while sometimes it was obvious why a video was demonetized, in many instances YouTubers who went to great lengths to sanitize their videos and bleep out anything remotely controversial still found themselves caught in the algorithm’s unflinching and uncompromising net.

As an independent content creator myself, I know what it’s like to be at the mercy of these giant tech platforms, and I’ve come across too many stories of bloggers and media outlets that have gone all-in on a platform only to have the rug pulled out from under them when that platform changed direction or tweaked its settings.

And I’m going to give YouTubers the same advice I’d give to all those other content creators: diversify.

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What I mean is that it’s time to start treating YouTube ad revenue as just one piece of the revenue pie. No longer can you build a channel with the idea that if you just reach some magical view count, then the ad revenue alone will cover your expenses and make you rich.

Here are some ways I see YouTubers finding alternate revenue streams:

1. Crowdfunding: Ironically, the membership site Patreon was founded precisely because a YouTube creator was frustrated by how little money he was making on YouTube ads. The great thing about getting subscribers to pay is that you really only have to convert a tiny percentage of your most hardcore supporters and you can still make pretty decent income. For instance, The Nerdwriter has 1.8 million subscribers on YouTube, but only 2,500 Patreon subscribers, which is only 1/10th of 1 percent of his overall audience. Yet those 2,500 Patreon subscribers collectively give $3,700 per video, which, at 50 videos a year, generates almost $200,000 annually. Not a bad take home pay.
2. Direct relationship to sponsors: I’ve noticed more and more that YouTubers are forming direct relationships with a handful of sponsors and then either creating individual videos about those sponsors or simply adding a plug for the sponsor at the end of all their videos. This is similar to the host-read ads that you’ll hear in podcasts. Given studies that show famous YouTubers are enormously influential at driving buying behavior, more and more brands are eager to ink these kinds of sponsorship deals, and there are “influencer” agencies that are dedicated to forming them.
3. Events: If you’ve read any coverage of VidCon, the annual conference that features famous YouTube and Instagram stars, you know that vlogger fans are more than willing to open up their wallets and pay to see their biggest idols. Some vloggers have leveraged their fame to either throw their own events or charge five-figure speaking fees to conference organizers. The aforementioned Casey Neistat has dedicated entire vlog episodes to his speaking gigs.
4. Deals with traditional media companies: Many YouTubers use YouTube as a stepping stone to secure more lucrative engagements with traditional media companies. The vlogger Jake Paul, for instance, segued his fame into a role on a Disney Channel show. The comedian Bo Burnham now has a couple Netflix comedy specials under his belt. Broad City started out as a YouTube web series. It’s not uncommon now for Hollywood and the media at large to view YouTube as a platform for farming talent.

I’m guessing YouTube has heard the complaints of its creators and is taking measures to improve its vetting process in ways that might make the adpocalypse less severe. But even if YouTubers see all their revenue return to pre-adpocalypse levels, this means they should simply view the entire fiasco as a learning opportunity: the lesson being that a single revenue source is always going to be vulnerable to change, especially when it’s derived from a tech behemoth worth billions of dollars. When you’re just an ant in a land full of giants, no revenue source, no matter how lucrative, is safe.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.