Nowadays it seems like everyone wants to get rich on YouTube. That’s understandable, and when you do I hope you’ll let me come over and swim around in your giant pool of money like Scrooge McDuck. However, the recent spotlight thrown on the soaring paydays of YouTube’s biggest stars is mostly driven by the media. Many mainstream outlets only recently realized that YouTube stars exist at all, let alone that they’ve been making bank posting videos on the internet. This shock and awe notwithstanding, making money on YouTube is nothing new. In fact, it’s been a part of the site almost since the start. Check out our timeline of some of the biggest moments in YouTube money!
Google purchased YouTube way back in October of 2006, and seven months later in May of 2007 they introduced what is still the most significant innovation ever to hit the site. The YouTube Partner Program was a first of its kind initiative that allowed video makers to share in the profits Google was making by posting ads on their videos. In the early days the program was an elite club available only to the most viewed creators on the site. The YouTube Partner Program ushered in a whole new type of career: professional YouTube content creator. It was also the first step in transforming YouTube from the video-based social network it had been, into the most innovative media platform of the past two decades.
Multi-Channel Networks like Machinima began to emerge as important players in the YouTube space. Networks functioned by aggregating a large number of YouTube channels and claimed a percentage of their ad revenue in exchange for services. Those services included advice and production assistance, promotion and branding, marketing, and arranging brand deals to supplement creators’ income. MCNs had existed in some form for digital content prior to the partner program, but YouTube’s promise of consistent revenue on a single stable platform threatened the existence of the MCN, particularly after the addition of talent managers and marketing training courses.
After working together on the short-lived but highly successful collaborative channel The Station, Danny Zappin, Scott Katz, Kassem G, Shay Carl, Ben Donovan, and Phillip DeFranco came together to form Maker Studios, the first MCN that was predominantly owned and controlled by well known creators of online video.
By 2011 YouTube had cultivated enough content creators to know that it had a successful business model on its hands. Though many independent creators were already producing studio quality content on YouTube, there was a lingering perception that the site was all people talking to webcams in their bedrooms and cats falling off of things. YouTube wanted to grow up, and they decided to do it by pouring $100 million into the Original Channels initiative. This program would provide funding and incentive to major media brands and celebrities to entice them to launch their own branded YouTube channels.
In 2012 YouTube took another quantum leap forward. Having spent years slowly expanding the Partner Program, cultivating a large crop of talented and marketable creators and developing best practices for success on the platform, YouTube finally opened up the partner program to anyone and everyone with a YouTube account. It was now possible for any creator to monetize their videos, good news for anyone who ever posted a one-off video that unexpectedly went viral. The move broadened the definition of who could be a YouTuber.
YouTube once again tried to reinvent the way creators made money online with subscription-based channels. Rather than relying entirely on ads, high-performing channels could opt to make their content subscription based, charging fans a monthly fee in exchange for video. A number of channels took the plunge, and though most have since converted back, a few notable exceptions do exists. News network The Young Turks have found great success in the subscription based model which allows them to tailor their coverage to their hardcore fan base.
Maker Studios is acquired by The Walt Disney Company for $500 million — a figure that could climb to $950 million based on a number of performance goals, making it the biggest exit for an MCN ever. The Maker buyout was preceded by the acquisition of a number of other companies specializing in YouTube and onlien video including MCN Revision 3, talent management organization Big Frame, and media company AwesomenessTV. These acquisitions proved that YouTube had finally become profitable enough to interest major media companies like Disney, Dreamworks, Discovery Communications, and AT&T.
The year also brought some major revelations for YouTubers. Traditionally shy about discussing profits, either because of contract rules or fear of alienating their audience, members of the YouTube community weren’t expecting Harley Morenstein to blow the lid off the industry with his iconic “millions of dollars” speech at the 2014 Streamy Awards.
Four months into 2015, rumors are already circulating about another major change to the way that money is made on YouTube — a long talked about subscription version of the site that would replace ads with a monthly fee. This fee could be used to bolster payouts to YouTube creators and make the industry even more profitable than it is under the current model. Leaked letters have suggested that the move could be coming as soon as the next few months. Other companies, such as Vimeo and Vessel are already offering well-made video on demand and paid subscriptions platforms, and with the expansion of Facebook’s video feature, it’s hard to tell what the future looks like for the company, and for those who make their living on it.