While YouTube stars often share the intimate details of their lives to millions of fans, there’s one thing they usually leave out: money.
We hear conflicting mumblings. We hear that YouTube star PewDiePie has reportedly made $12 million, and that he’s not the only one to score a big payday.
But we also hear that stars with half a million subscribers can sometimes struggle to make ends meet. There’s a disconnect that comes from both the complicated nature of how these stars actually make money, and the lack of standardization in the industry.
We talked to Scott Fisher and Adam Westcott, who manage YouTube stars like MyLifeAsEva (5 million subscribers) and LaurDIY (2.6 million subscribers), to get a sense of how the industry is evolving, and where the money is coming from.
While revenue from Google’s ads provide a baseline income YouTube stars can count on, Fisher and Westcott say that the key to success right now is being ready for any opportunity: brands, shows, books, appearances — the list goes on.
There is no set place all the money comes from.
One area that’s exploded in recent months is selling content to premium streaming video services, like Verizon’s Go90 or YouTube Red. To take advantage of this, Westcott says he’s worked with each of his clients to develop a handful of original short-form ideas, two or three half-hour ones, and at least one feature-length concept. “We’re ready all the time,” he says. He never knows when the right call will come.
This might seem like overkill, but Westcott explains that it’s increasingly valuable for YouTubers to jump on a blockbuster opportunity. Brands, in particular, are starting to look for longer-term deals with stars — the type of opportunities that don’t come around twice.
“They want to work with one person per year,” Fisher says, to sign someone to be a spokesperson a brand. Brands, in general, are less focused than they once were on one-time promotional videos on YouTube. In May 2015, one of his clients, Gigi Gorgeous (2.1 million subscribers), became the face of a Crest toothpaste line in Canada (she’s Canadian).
This has driven a change in the way Fisher thinks about management.
“It’s not just signing people willy nilly,” he says, and hoping that one will work out. “It’s about helping to create that big star that you can do so much with, that generates the revenue 50 clients would.” Brands have begun to come back, not just to their management company, but to specific stars. And if you become one of those stars, it can be incredibly lucrative.
“[For brands] it used to be, round up a bunch of influencers and see what happens,” Fisher says. Not anymore.
The logical extension of this is a divide between the haves and have-nots, even among YouTubers with high subscriber counts.
Who is a superstar?
When Fisher and Westcott assess whether a YouTuber has a potential to be a star in the wider world, they look at both traditional “star quality” and what the market needs.
“Brands have a huge need for mothers,” Westcott says. “There are less than a dozen successful mums on YouTube,” he continues. “There are ‘mummy bloggers,’ yes, but as far as video, no.” And brands want the spending dollars of mums who relate to a YouTube personality.
But does the deep intertwining of corporate brands with the income of YouTubers threaten their audiences?
“Every time Allison and I post a branded video — a YouTuber’s bread and butter — we make money but lose subscribers,” she explains.
“A video we created for a skincare line, for instance, drew ire from fans writing ‘ENOUGH WITH THE PRODUCT PLACEMENT,’ despite this being our third branded video ever.”
I asked Fisher and Westcott whether their clients experienced this, or whether fans understood that this was simply a reality of the business — and of them getting to enjoy content for free.
“I don’t think the fans worry about the talent making a living,” Fisher says. ‘They are more concerned about if they are being entertained or not. As long as the content is exciting for them, if they get to see Eva go to Hawaii on this amazing trip, they don’t mind if she is wearing Sperrys the whole time. It’s a primal instinct: are you having fun, are you liking this content or not.”
The trick, then, seems to be becoming one of the superstars who is able to score brand deals with favourable terms. Indeed, having a star wear Sperrys is not particularly invasive. But to do this you need to be in a position of relative power, which is easier said than done.
“We say no to a lot of incoming stuff,” Fisher says.
The big question mark
Westcott says the focus moving forward is going to be on conversion — translating eyeballs watching YouTube into dollars.
In the past, stars, managers, and brands have relied on sheer numbers to make money.
“These books, these independent films. Just because there is an influencer attached they get made,” Westcott says. The thought is, “If I get 2% [of my YouTube] audience to buy a book it warrants a bestseller.” That’s part of the reason there is such a glut of YouTuber books on the market.
“You have some YouTubers that are putting out ‘memoirs’ and they are 21 years old,” Westcott laughs. “How much of a life story do you have to tell at 21, I don’t know.”
But those audiences haven’t always translated. Westcott points to Verizon’s Go90 app.
“Even they have started to take a step back and say, ‘Wow, we invested all these millions of dollars, and we forgot about the paid media and marketing component. We assumed that by attaching all these creatives and influencers, the eyeballs would come.’ Now that they have got the content, there is this second wave of how do [they] better market it.”
Figuring out how to pull audiences into other places is the next challenge. Part of that burden is on services like Go90, or corporate brands, but some will need to be figured out by the stars themselves.
If you want to be one of the “haves” in this superstar economy, you will have to prove not just that you have an audience, but that it will follow you with its dollars.