Over the last decade or so, YouTube has gone from an online platform to a vocation for young people across the world. What started as an online dating platform with great video upload capacity has now turned into a viable career for circa thousand of people every year.

As that number of people earning a healthy living from YouTube grows so too does the innovation of the YouTuber Creator in monetising their content and the latest phase in the journey is quite an interesting one.

A Brief History of YouTube

In 2005, three intelligent chaps registered the domain name www.youtube.com with the headquarters situated above a pizzeria in Californa. Humble beginnings some would say.

Ex-PayPal employees Jawed Karim, Steve Chen and Chad Hudley had the brainwave to set up an online video sharing platform after having a timely realisation. In 2005, they had failed to successfully create an online dating app which happened to have great video upload capacity at the same time they realised that there was nowhere to rewatch content online. It was an obvious step, to them at least, to reinvent their failed site as a video platform.

That idea then received $11.5 million investment from the venture capital firm Sequoia Capital. Karim uploaded YouTube’s very first video at the end of 2005 after beta testing which was entitled “Me at the Zoo”.

By March 2006 the platform was receiving 20,000 uploaded per day and by the end of 2006 Google had acquired the brand for an eye-watering $1.65 billion. At which time it hadn’t even hit the UK.

The exponential growth continued and by 2009 the site was yielding 1 billion views per day and then hit 3 billion views daily by 2011. In 2007 YouTube made it possible for creators to earn money from the platform.

And that’s where this story begins.

Original Content Doing it For the Fun of It

Pre-2007, content creators were making videos online for the fun of it. They were doing it for a few, quite nice reasons:

• They loved creating content;
• They loved the video editing process;
• They genuinely wanted to share their ideas with the world.

Now, whilst it’s too much of a leap to say those days are behind us, what is true is that the motivation behind making a YouTube video these days has somewhat changed.

Creators went from making videos solely for the fun of creating to making videos with money in mind. Why wouldn’t their motivation change? With so many people actively disengaged with their day jobs, this creative outlet provided hope for many people. Hope that they didn’t need to spend the next 40 years tucked in their office cubicle.

They could use their creativity to generate an income.

This new light for many creators led to a surge in content creation. It also meant that more and more people were joining the platform every day. Fast forward today and you can make a healthy living (a really healthy living) if you manage to master the YouTube algorithm.

But what are the ways you can make money on YouTube?

From ‘For the Fun of It’ to ‘For the Money of It’

In 2019, circa 700 agencies existed with the service of helping brands find influencers that would help them sell products. But that isn't the only way these content creators are making money, far from it. In the ever-expanding ways of making money online, here are a few that common for YouTubers to use:

• Sponsorships — as aforementioned, companies specialise in pairing creators with brands. Brands get access to the audience of the creators and the creators get a hefty reward for their time;
• Merchandise — a bit of a contentious subject, especially if it involves just slapping a logo on a $2 t-shirt and selling it for $30. YouTubers will sell hats, t-shirts, hoodies, pretty much anything you can put a logo on to their fans;
• Ad revenue — a staple for the YouTubers. The more views, the higher the click-through rate, the more dollar bills in these creator’s pockets.
• Fan Funding — a smart cookie, somewhere in this bizarre world we live in, had a quite interesting, quite fundamental thought. That thought was that in a sea of 200,000 subscribers, there will be some true fans. True fans are those folk who properly love the content these creators put out into the universe. They not only like and subscribe to their content, but they simply adore it. It’s equivalent of going every single gig of your favourite pop star, but you don’t stop there, you know the upcoming tour dates, have all the latest merchandise and have a poster on your wall. That’s the level of fandom I’m talking about. Well for those folk, we have a platform called Patreon which allows people to pay a subscription for exclusive content. For a small fee every month you get access to content that other people don’t have.

Needless to say, there are many income streams for creators across the planet. Rightly so they are now able to monetise what they do; The quality of some of the videos on the platform are production-ready, TopJaw is a great example of that. The content the presenter Jesse and videographer Will produce is nothing short of Netflix-level. They should be handsomely rewarded for that level of entertainment.

But just recently I have seen a change in the tides. It’s probably my slow realisation but it has just dawned on me the new era of YouTube monetisation that is sweeping the YouTube nation.

The Next Phase

Welcome to digital products. What’s that I hear you say? Well, digital downloads are the next phase in the YouTuber’s monetisation journey. This new way of generating income is a game-changer, truly. Digital products might sound odd; when I first realised you could charge real money for something digital I was a little confused.

“What so this doesn’t get delivered to my house? I just simply download it, but wait where’s the physical product?”

Well, that’s the beauty of this model. There is no physical product. People are buying downloadable content and what’s so good about that I hear you ask? Well, consider the frustrations with a physical product or a service.

A Physical Product

Whilst the margins might be good, they could be really quite good, nothing will avoid the inevitable. The inevitable problems surrounding a product-based business:

• Products getting lost in the post;
• Customers wanting refunds so need the ability to send them back;
• Cost of delivery;
• Problems with misplaced products, lost deliveries, wrong deliveries.

All the things that used to cause business such problems, huge revenue losses, hits to the bottom line are just gone. With a digital product, there is no delivery cost. There is nothing to get lost in the post, nothing to be delivered to the wrong address. You get sent a link and you can download the content.

Simple.

Now let's consider a service.

A Service

With a service, there is nothing to get misplaced, no wrong deliveries, no miscommunication or lost product. However, service is expensive because you are trading time. Which arguably is the most expensive thing of all. There is one fundamental flaw with a service and that is that you are trading your real-time for someone else’s money.

• A live teaching session needs a teacher present;
• A car service needs someone to service it;
• A fast-food delivery service needs someone to deliver the food.

With a digital product, none of those issues exists.

For example, take an online course. You produce 20 videos for your online course on how to film YouTube videos. As a content creator with a high number of subscribers, you are well placed to teach that subject. So you produce 20 videos, put them into some sort of structure and sell that digital product for $60 a pop.

Those 50 hours you spend creating that course can be purchased over and over again with no extra time from you. Noone stocking the shelves with digital courses, no delivery cost, no need for you to be there in person.

Nothing.

This model uses a finite resource (time) and creating an infinite product.

It’s pretty spectacular.

Once I noticed this phenomenon I started seeing it everywhere. WordPress themes, Snapchat filters, PDF cheat sheets, online coaching, e-books. These products are everywhere and it’s a real game-changer for anyone with an audience.

So What’s Next?

In the world we live in today, becoming a YouTuber is a viable career. Matt from MattDoesFitness was a P.E. teacher in the UK before his YouTube channel took off. He’s just gone from a relatively small house in his local area to an absolute behemoth of a house in the country because of his newfound fame. Matt D’Avella moved from client work to original content creation and makes a full time living out of it. Ali Abdaal has just quit his job as a full-time doctor (yes a doctor) and plans to see where this YouTube stuff takes him for a while.

Look, if you can make money eating your dinner on YouTube (shoutout to BeardMeetsFood) then I’m sure you can find your niche and monetise it in some way.

Like all startup ventures, you need a few key attributes: persistence, consistency and adaptability. If you can find some true fans, work hard at putting out quality content and monetise your audience, well the world is truly your oyster.