YouTube can be a fantastic place for video makers who want their videos seen by a large amount of people. With established ad products, YouTube can also be a reliable source of recurring ad revenue. But as YouTube’s own homegrown stars have come to learn over the past decade, building a business on top of YouTube remains tough — even if you have an impressive number of subscribers and views.

THE KEY HITS:

  • YouTube gets credit for having a huge audience that chooses to watch videos and ad products that can reliably deliver revenue back to channel partners.
  • But as YouTube stars have learned over the past decade, it’s hard to build a business entirely reliant on YouTube ad revenue.
  • At an average $4 CPM, 1.4 million subscribers and 4.1 million video views only gets you $108,000 per year from YouTube ad revenue — and that’s after YouTube’s cut.
  • To get CPMs of $15 to $20 or more, you need real scale, something which TV programmers that can offer “run of network” ad buys have. But even here, there are issues.

Quick: How much should 16.4 million subscribers on YouTube fetch you if you were to sell that channel? How about if that channel had 17.5 billion lifetime views? If you’re Little Baby Bum, a British children’s channel full of 3D animated videos of nursery rhymes, the answer is probably $10 million, according to Bloomberg.

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