The study by Offenburg University of Applied Sciences found that 96.5% of people who try to earn money on YouTube fail to earn above the U.S. poverty line. (That line is $12,140 per single person.)
The report also says says that the top 3% viewed channels could bring in revenue via advertising of $16,800 a year.
This is a stark contrast to the amount of money that the top 3% of video makers earn on YouTube. YouTube channel creators have a long hill to climb to make money from advertising.
YouTube Channels and Sponsored Content
But it’s critical to understand that top YouTubers often post sponsored content that also creates revenue via advertising. By using dual income generating tactics, people are able to earn far more than the $16,800 quoted here.
While it’s easy to blur the lines between a YouTube star and a TV or movie star, the financial realities of their lives are very different. TV and movie actors don’t have to provide their own equipment, like YouTubers do. They also have the option of joining a union, which then protects their rights and the money they earn. Contracts are more common and much stricter.
YouTube doesn’t have the protections that the traditional media world has. That can and usually does work against the financial interests of video makers.
The YouTube Circle
However, if you only rely on advertising revenue, you can stall out easily. Most people don’t recoup the money they put into their channels. And the algorithm of YouTube favors the top videos, meaning that if you’re a new channel it’s harder to generate views. And of course, if you’re not generating views, you won’t make any money from advertising.
While this report shows that advertising is not a lucrative source of income for the vast majority of YouTube channel owners, it doesn’t account for sponsored content.
Sponsored deals are worked out by the content creators, and they can charge whatever they want. With advertising, the advertisers and the platform itself holds the power. But when it comes to sponsorship, the content creators have much more control.
Making money in a YouTube channel is a dream for many, but sadly, not a reality for most.
Kara Perez is the original founder of From Frugal To Free. She is a money expert, speaker and founder of Bravely Go, a feminist financial education company. Her work has been featured on NPR, Business Insider, Forbes, and Elite Daily.