If you’ve been paying attention to popular music these days, you’ve noticed that YouTube is propelling songs to mainstream success. “Gucci Gang,” “The Race,” “Rubbin Off the Paint”—all of these songs went from YouTube viral status to the Billboard Hot 100, launching the associated artists to stardom.
Well, stardom’s great and everything, but what about money? Surely getting tens of millions of YouTube plays must lead to riches, right? After all, don’t you get money every time someone clicks on your video? As it turns out, not exactly. As a musician, you can make money off of YouTube, and a lot of people do. But it takes a lot of views to make real money. The reality is that YouTube’s payouts are incredibly complicated and, often, incredibly small.
Here, then, are answers to some of the big questions you might have if you’re going to try and money with your music on YouTube. Good luck, and may the viral gods be with you.
#1: How much money will I make per view?
The exact amount of money you’ll make on a video depends on a number of factors. But several experts confirmed with us that, on average, the money works out to between $1,000-$2,000 per million views. Yes, million. At the high end, that’s about $0.002, or one-fifth of a cent, per click. That’s around half of the per-stream payout you’ll get from Spotify, and less than a third of your haul from Apple Music.
This being the music business, that’s not the end of the story. If you’re signed, your record label gets a cut. Got a manager and a lawyer? Them too. Is there a featured artist? An additional songwriter? A producer who made the beat? Did you hire a company to help you get all the money YouTube owes you in the first place? All of them get a fraction of your fraction of a cent. So of the $1-2K, an artist will likely have a few hundred bucks left over at the end of it all.
If you’re lucky enough to get signed to a major label, hold onto your hats. Majors will insist that their acts post videos to Vevo—which means higher ad rates and thus a little bit more money. But Vevo is owned by the labels, which means if you leave, they’ll still control your Vevo channel.
#2: What happens if someone else uses my music in their video?
One of the main ways artists make money on YouTube is by other people using their songs. This is referred to in the trade as UGC, for “user-generated content.” So if your song is scoring someone’s BMX video, makeup tutorial, or birthday party, you’re entitled to all of the money.
The catch is, you’ve got to find them first. Money starts flowing your way once YouTube becomes aware that your song is being used. Any monetization occurs before that happens goes straight into the pockets of the person who originally posted the clip. Only very occasionally, if there’s enough money involved and you have a good negotiator on your side, can you get any of it back at that point.
A lot of UGC is caught quickly and automatically by YouTube’s Content ID system. They’ll compare any audio posted to the master files they’ve been given of countless songs. But the catch is, there are ways around that. If a short enough section of the song is used, YouTube’s system may not catch it. Also, there is a sort of ongoing arms race between people trying to figure out ways to fake out the system by altering the song just enough to fool YouTube, and folks at the company, who are plugging those holes as fast as they appear.
Jacob Pace, from Create Music Group, a company that represents artists in these very battles, estimates that YouTube’s system only catches about 60% of all the stuff out there. To get the rest, you’ll either need to get very good at searching, or hire a company to find and monetize that additional 40% for you.
#3: So where does all the money come from, anyway?
The short answer is, ads.
The longer answer is, ads you as an artist have only the tiniest bit of control over.
Negotiations happen between YouTube and the advertisers. They set the rates for different types of ads. What they rely on most is demographics and location of the consumer. If you’re using YouTube while logged in, chances are that Google knows a lot about you—where you live, what you like, etc.—and will serve you ads based on that.
As the owner of a YouTube channel, you can control what ads your users see only in the broadest strokes. You can make sure ads don’t appear from different types of companies—astrologers or liquor brands, for example. You can also ban ads from specific sites. If you don’t want a rival band’s label to buy up your ad space, for example, you can nix that. But that’s about it.
Rates vary wildly. Companies are paying per “impression”—how many times their ad is viewed. So, for example, companies who purchase those skippable ads that appear at the beginning of videos don’t have to pay if you skip the ad. They only pony up if you watch a significant amount of it or click through. And different types of ads cost different amounts of money. Those skippable ads are generally the most expensive, followed by pre-roll non-skippable ads. They’ll have a CPM of between $12-15. Down at the bottom in terms of cost—and way more common—are display ads (those are the ones that appear just to the right of the video, and above the suggested videos list). They will have a CPM ranging from less than a dollar to around $3, depending on whether they are reserved (more expensive) or just auctioned off to the highest bidder (less expensive). And don’t forget the most important part: YouTube keeps 45% of the money from ad sales for itself.
Overall, a fair average to expect would be a CPM of about $4 after YouTube takes their cut.
#4: What the hell is a CPM?
Good question! “CPM” stands for “cost per mille, ”which, confusingly, does not mean “cost per million,” but instead “cost per thousand”—that is, per thousand impressions.
Note that CPM does not mean cost per thousand views of your video. First off, not all ads served actually count, as we’ve seen with the skippable ad example. Second, as you’ve surely noticed, YouTube does not show you an ad every single time you watch a video. The company is well aware that doing so would cause you to bail. So they show you just enough ads to make sure that you keep coming back. On average, about 30-40% of overall views count as “impressions.” So one million views would get you, optimistically, 400,000 impressions. With a pretty middle-of-the-road $6 CPM, that would leave you with, after YouTube takes their cut, $1,320.
#5: So who’s making money, anyway?
The primary way to make money in a YouTube world is volume. Have a lot of videos out, or get people to use your songs in a variety of ways. If you’re not already a mega-star, UGC may be the biggest wave to ride. Witness Baauer’s “Harlem Shake,” which made the song’s artist (though not its writer) a ton of money because of the thousands of videos it inspired, which collectively had tens of millions of views.
Another, slightly smaller-scale way of getting more views is, somewhat paradoxically, to narrow your focus. Within the dance music world, for example, making music within a narrow sub-genre such as Simpsonwave (yes, it involves the Simpsons and yes, it’s a real thing) means that you have less competition and are more likely to be noticed, and therefore more likely to end up on playlists put together by fans—playlists that end up with millions of views.
#6: If I do start making money, how do I keep going?
This is perhaps the easiest question of the bunch. According to Pace, if you can manage to find a big audience and earn a couple thousand bucks a month (keep in mind, that’s several million views, either on your own content or UGC), you can expect the money to keep rolling in if you keep the supply up. Pace says that, in the majority of cases of people who have already gotten to where they’re earning a living wage via YouTube, “royalties don't go down, as long as you consistently release more music.”
So, after all that, good luck. In short, if you can get lots of people to click on your stuff, and put out product consistently to keep that audience, you have a chance of earning enough money to live on. Pace shared stories of Create clients who have managed to do just that.
“We've had cases where some artist is like, ‘Oh, I was about to join the military, and now I'm making $6,000 a month,’ or people literally having to produce on the side and then have a day job where they're doing telemarketing, and now they're making $5,000 a month,” he says. “So even at $5,000 a month, that's enough for you to live on and just do music full time.”