Making Money From YouTube: How Crowdfunding Can Fill The Gap

jack-conteImagine netting over a million YouTube views in a month and getting paid as little as $50 for that accomplishment.

That is the reality Jack Conte, half of the music group Pomplamoose, spelled out in a recent interview with Upstart Business Journal. Pomplamoose has over 90 million views on its YouTube channel, but Conte says it wasn’t paying the bills.

Related: Chasing Their Star, on YouTube [New York Times]

It isn’t getting any better, either. The reality is that content creation is alive and well. (Sites like ours are part of that movement!) It’s easier than ever to create all kinds of content – news, video, audio, etc. – and advertisers know this. Ad rates are on a downswing as ad impressions become more numerous.

This is the case on YouTube as well. According to a recent New York Times article…

 On YouTube, the average rate for pre-roll ads, those 30-second commercials that you must watch before seeing a video, is $7.60 per 1,000 ad views, down from $9.35 in 2012, according to TubeMogul, a video ad-buying software company. The same pre-roll ad on a broadcaster’s site, like that of CBS or CNN, would cost more than $20 per 1,000 views.

YouTube also takes a 45% cut of earnings, a practice that is causing increasing detraction from those that make YouTube tick.

Enter crowdfunding.

patreonConte’s frustration led him to launch Patreon, a crowdfunding platform for YouTube content creators. Patreon is one of a small handful of sites essentially cutting out the middleman for YouTube content creators. Consider Peter Hollens, who now nets over $2,700 per music video he creates from only 519 people. If each of those viewers viewed each video once, that works out to revenues per thousand views of somewhere around $5,000. No advertiser could or would ever consider paying that.

It’s a powerful thing.

Another platform active in this space is TubeStart. TubeStart co-founder and CEO Josef Holm recently penned an article for ReelSEO on the subject of multi-channel networks (MCNs) taking an increasing interest in crowdfunding. Large MCNs include companies like Machinima. MCNs are powerful in their ability to achieve scale on platforms like YouTube. Machinima, for example, has over 4.7 billion (with a B) YouTube views and over 10 million subscribers.

Holm explains…

While many YouTube creators think that MCNs are making money hand over fist, reality is that a lot of them are not breaking even (yet). Original content is a loss leader and is a risky business. For the most part, MCNs are facing the same dilemma of declining CPM rates and the increasing amount of quality content vying for viewers as independent creators do. Even creators with a million subscribers find it hard to get funding for new content, support their business off of AdSense and YouTube is no longer handing out grants to produce original content like they used to.

Tubestart logoThere is hope that major transformation can take place if (when?) the MCNs roll into the crowdfunding space. It would instantly bring a lot of eyeballs to any crowdfunding-related initiative. This phenomenon has already begun with a partnership between Fullscreen and TubeStart.

Related – TubeStart: Four Ways For YouTubers To Crowdfund Money From Fans

So, how can YouTubers make more money off their content? Consider sites like TubeStart, Patreon or any other site that offers a subscription-based (recurring payment) crowdfunding model. It removes the middleman in a content creator’s relationship with his or her fans and could provide the means by which more content can be created.

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