If you’ve watched any music video on YouTube, you’ll have seen the ads that come with each one. YouTube is the world’s largest streamer of music and these ads have allowed it to monetize what many once believed was un-monetizable.
I was curious about what this means in financial terms to artists like Walk Off the Earth, so I talked to some people in the industry who know how such things work. Let’s try to estimate things, shall we?
YouTube’s payment rate is approximately $2.50 CPM, which means for every one thousand views of a video, it pays out $2.50 US. YouTube keeps 50 per cent of all revenues. Fifteen per cent goes to the rights holder of the song (the publisher/copyright holder) while the remaining amount — 35 per cent — goes to the performer.
Now let’s do the math. First, divide 74.5 million views by 1,000 to get the CPM number. Multiply that number (74,500) by $2.50 and you have total gross advertising revenues of $186,250. Of that, YouTube keeps half, which is $93,125. The rest is divided between the publisher
(15 per cent of $186,250 or about $28,000; Gotye gets a piece of this) and the band (35 per cent of $186,250 or a shade over $65,000). Finally, divide that amount amongst the five members of the band and you have earnings of $13,000 each.
Not bad when you consider that this is the product of 14 hours work in front of a video camera but a little sobering when you consider how difficult it is to get that many people to watch a single video.
But then we have to factor in all the spin-off revenues like the tens of thousands of downloads through iTunes, increased attendance at gigs, more merch sales and licensing opportunities. And how can you put a price on the worldwide publicity? What was that featured spot on Ellen worth? I’d say things are working out very well.
And Bieber? He’s made over $628,000 in YouTube bucks from Baby.