How do content creators make money?
A deep-dive into the business of content creators.
Content creators are some of the most underappreciated and misunderstood individuals in the entertainment industry. Over the past few years, I’ve become obsessed with the world of content creators, the future of media, etc. and I wanted to start sharing some of my thoughts. If you’re interested in more deep-dives and analysis around the future of media, gaming, and technology, feel free to subscribe below!
If you ask any kid what they want to do when they grow up, they will likely say that they want to become a content creator, influencer, or streamer. A couple of months ago, I stumbled upon this tweet from the content creator: Eddy Burback, and I think it perfectly summarizes why most people want to become content creators.
curtmills @CurtMillshorrifying https://t.co/5eToEhTqDy
Content creators are making a living doing what they love.
I’ll be the first to admit that becoming a content creator full-time is incredibly difficult. With that being said, if you manage to build an engaged audience it can become a very lucrative career.
The biggest content creators have become the modern-day rockstars — mansions, expensive cars, designer clothes, etc.
Creator monetization is an area that I think about a lot, and I wanted to help demystify this world for casual viewers and fans. Content creators are always looking for new ways to diversify their income and have a sustainable career. Monetization is, arguably, the biggest pain point for content creators. As a result, there is a tremendous opportunity for new platforms to emerge in this space.
To keep things simple, I will focus on the major revenue streams and platforms that have emerged for content creators:
Donations & Tips
Most content creators try to leverage all of these revenue streams.
It’s important to highlight that if a content creator isn’t “brand safe,” they risk cutting off several of these revenue streams.
As of today, YouTube is the best platform to earn direct advertising revenue on a per-view basis. The passive revenue that content creators can earn from YouTube is incredibly compelling and one of the main reasons why content creators try to bring their fanbase to YouTube.
YouTube creators that have more than 4,000 valid public watch hours in the last 12 months and more than 1,000 subscribers are eligible to join the YouTube Partner Program. As a YouTube Partner, creators can start to earn revenue from pre-roll, mid-roll, end-roll, and overlay ads that YouTube serves on their videos. In general, YouTube Partners earn 55% of the revenue while YouTube keeps 45%. YouTube Partners are paid based on the cost per thousand views (CPM) that an advertiser pays. To put it simply, CPM is the amount of money that an advertiser is willing to pay for 1,000 views of their ad.
Given the real-time nature of YouTube’s advertising platform, there are a lot of factors that go into determining a content creator’s CPM. However, we can conservatively assume that most creators earn between $3-5 per 1,000 monetizable views. Creators are only paid when at least 50% or 30 seconds of an ad is watched. YouTube doesn't show ads for every view, so not all views are monetizable. It’s also important to re-emphasize that most platforms have strict guidelines around which content is eligible for advertising monetization.
Over the past few years, Facebook, Twitter, and Twitch have also enabled content creators to earn revenue by serving advertisements on their content. For example, David Dobrik and MrBeast have started to upload their catalog of videos to Facebook as a way to unlock an additional revenue stream.
Brand sponsorships, also known as influencer marketing, has become an incredibly fast-growing revenue stream for content creators. Brand sponsorships are when a business pays a content creator to promote their brand or product. These deals are typically done for a one-time flat rate fee, but some brands (or creators) prefer to do performance-based incentives.
Content creators who have built trust and relationships with their audience are very effective at promoting brands. For example, David Dobrik has successfully integrated SeatGeek as a character within his videos. Brand sponsorships, historically, were reserved for the top content creators and celebrities. However, over the past few years, brands have started to realize the potential in sponsoring smaller content creators with engaged fan bases.
Affiliate revenue is the commission that content creators earn from driving sales of a specific brand or product. Affiliate revenue is typically low-margin, but it is also relatively passive. The most common form of affiliate marketing is when a content creator shares Amazon affiliate links for their setups and gear. For example, this is the Amazon affiliate page of MKBHD, a very popular content creator covering technology.
Affiliate deals are a low-risk way for brands to partner with content creators because they are only paying creators when they can attribute a sale to them.
GFUEL, a gamer-focused energy drink, is a brand that has successfully leveraged affiliate marketing with content creators. GFUEL has done affiliate deals with some of the biggest gamers and streamers in the world. Most of these content creators actively promote their affiliate code to ensure that purchases are attributed to them (e.g. Use Code PEWDIEPIE at checkout for 30% Off GFUEL!).
Advertising-driven revenue varies greatly depending on the performance of your content. As a result, the major platforms have started to build tools to encourage fans to directly support content creators via monthly recurring subscriptions. Monthly subscriptions are a critical revenue stream for content creators, as they help normalize and significantly de-risk their income.
The primary revenue stream for live-streamers is monthly subscriptions from viewers. Twitch popularized the behavior of supporting creators via monthly subscriptions by empowering streamers to create custom badges, emotes, etc. for their subscribers.
Examples of channel badges, emotes, and benefits can be found below:
Given how valuable recurring revenue is for content creators, several standalone platforms have emerged to help content creators earn recurring revenue. There are two major platforms in this space: Patreon and OnlyFans.
Patreon enables content creators to build their own membership program for fans.
Cody Ko and Noel Miller are two content creators who have successfully leveraged Patreon to unlock a recurring revenue stream. They have three different membership tiers for their fans, but one of the biggest selling points is that Patrons receive an additional podcast episode from them every week. As of today, they have 13,413 Patrons paying them $65,424 per month.
OnlyFans has traditionally been associated with NSFW content; however, I strongly believe that it has the potential to emerge as a popular platform for content creators to earn subscription revenue for all types of gated content.
OnlyFans is a subscription-based platform where users can sell and/or purchase original content—typically of the pornographic variety. When utilized as an adult site, users will post NSFW videos and photos to their accounts, which are protected by a paywall. To gain access to the content, an individual must pay a monthly subscription fee that ranges anywhere between $4.99 and $49.99.
Donations & Tips
Donations and tips are another popular revenue stream for streamers and content creators. However, donations are a very inconsistent revenue stream for most content creators. With that being said, they are a great way to supplement income. Donations are typically facilitated via live-streams, as fans donate with the expectation of getting their message read by a content creator.
As a result, the most common platform and tool that content creators use for donations is StreamLabs. Despite processing over $400M in donations, StreamLabs doesn’t charge content creators for using the product. Instead, StreamLabs uses its donation platform as a way to promote their other live streaming tools.
Cameo has turned the "donation for a shout out" into a scalable revenue stream for content creators. In short, Cameo has built a two-sided marketplace where they enable fans to get personalized video shoutouts from content creators and celebrities.
According to Tubefilter, the top content creators and celebrities on Cameo are earning between five and six figures a month for filming 30-second shoutouts, birthday greetings, and even marriage proposals.
Merchandise is one of the easiest ways for fans to support content creators. Thus, it has become a very popular way for content creators to monetize and engage with their audience. The biggest content creators, such as David Dobrik, reportedly earn over $800K/month in merchandise sales.
In most cases, these content creators are partnering with a third-party vendor to handle everything for them.
The most well-known vendor in this space is Fanjoy. Fanjoy creates merchandise for some of the biggest content creators in the world, such as David Dobrik, Addison Rae, Chase Hudson, Jason Nash, Avani, etc.
YouTooz takes content creator merchandise to another level. YouTooz is a collectibles company that makes vinyl figures of content creators — or as they say: "Collectibles of the internet's greatest."
The community that they have built around their collectibles is unrivaled, and I strongly believe that they are positioning themselves to become the next Funko.
It is rare for a content creator to build standalone businesses. However, I firmly believe that this is the “holy grail” for content creators.
If you talk with any content creator, they are always looking for new opportunities to expand their business. And…what better way to monetize than to build something native to your audience?
The problem is that building a true standalone business is hard and requires a lot of resources. Nonetheless, the content creators that do successfully navigate the “unknown” will reap the benefits.
I think that one of the best examples of this is what Nadeshot has done with 100 Thieves. 100 Thieves is a premium lifestyle brand and gaming organization. Nadeshot is a former professional gamer and content creator who founded 100 Thieves as a creative outlet for his entrepreneurial passions.
Nadeshot’s decision to create a company under a new standalone brand rather than rolling it under the existing Nadeshot brand was fairly unprecedented.
Nadeshot continues to create content and stream; however, the content is largely centered around taking his viewers and fans on the journey of building 100 Thieves. Over the past two years, 100 Thieves and Nadeshot have raised $60M from investors including Drake, Scooter Braun, Cleveland Cavaliers Owner & Quicken Loans Chairman Dan Gilbert, etc.
Another example is Emma Chamberlain who has built her own coffee company — Chamberlain Coffee. If you have ever seen an Emma Chamberlain video, she was likely talking about or making coffee in her video. Emma Chamberlain making her own coffee company was an obvious and native extension of her core content. As Emma Chamberlain says on her website:
I've always been obsessed with coffee, since I was probably too young to be drinking coffee. The problem is, I've never found a way to make coffee at home/while traveling that was delicious, eco-friendly, and EASY!!! I’m sick of dealing with machines, pods, or extra plastic packaging crap. It’s such a waste, and the flavor isn’t great.
Which is why I’m beyond excited to introduce my new favorite way to make coffee, my innovative Chamberlain Steeped Coffee Bags!!!
The key element with each of these revenue streams is that content creators need to build an engaged audience. Without an engaged audience, it’s borderline impossible to become a full-time content creator. Content is, and always will be, the key.
Once content creators have fostered a strong community, they have much more flexibility around monetization. Every content creator should be striving to diversify their income across each of these revenue streams.
I am confident that, over the next few years, we will see the biggest creators continue to leverage the fact that they have built massive platforms for distribution.
The biggest content creators are starting to realize that they can build meaningful businesses around their audiences rather than having all value accrue to their brand partners.
The next generation of consumer companies will be led by content creators.
Creator monetization is constantly evolving and my hope is that more platforms and tools will emerge to enable content creators to build sustainable careers and businesses.
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Special thanks to Jerry Lu and Amy Robbins for providing feedback on this post.