MEDIA*OR: YouTube Royalty Rate Variables Explained

Many artists and labels take issue with YouTube royalty payments, and not without cause, as the rate it pays is less than desirable. Here we breakdown what exactly goes into calculating these royalty, and the many variables which must be factored in.

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Guest post by Bobby Owsinski of Music 3.0

YouTube royalty payments can be a sore spot with artists and labels, and with good reason. The rate it pays isn’t all that great, but there are actually more variables on when and how you get paid than you might realize. Here’s an excerpt from my Music 4.1 Internet Music Guidebook that outlines how it works.

“First of all understand that just because your video is being viewed doesn’t mean that you’re getting paid. Your channel must first be signed up with Google Adsense (who supplies the adverts), then set for monetization, then the monetize option for each video must be selected. It’s only at that point that your videos can begin to be monetized.

There’s more to it than that though, as with everything involving digital music. The commercial on the pre-roll must be watched all the way through or else it doesn’t count towards monetization. If there’s a banner ad across the bottom of the video, it must be viewed for at least 31 seconds before it counts as a monetized view.

There’s also the fact that YouTube doesn’t sell ads on all of your views. Then some views on mobile devices just don’t register unless the viewer uses an official YouTube app.

Another major factor is the advertiser and the type of ad that’s placed on your video. If your audience happens to like expensive cars, jewelry or clothing, then an advertiser would probably be willing to pay a higher ad rate, which means that each video view would earn more money.

Yet another variable is the time of year the video is viewed, as many advertisers pay more for the holiday season than in January, for instance.

And then there’s the type of ad that’s used on the video or channel. This can vary from a skippable video ad that runs before your video begins (a “pre-roll”), to a transparent overlay add that takes up the bottom portion of your video, to a display ad featured to the right of your video and more. Each pays at a different rate.

That’s why there’s a wide range of payouts that can go anywhere from around $2.50 to $9.00 per thousand views. That means that a monetized video with 1 million views may generate anywhere from $2,500 to $9,000. YouTube takes a 45% cut however, which then puts the income to the copyright holder to between $1,375 and $4,950.

A generally accepted average of what to expect from a million video views is around $1,750, or $0.00175 per view after the split with YouTube, although its also common to see payouts as low as $0.011, or $1,100 per million views.

Don’t forget that if you’re signed to a record label, that this is what the label takes in, and you’re paid at your label royalty rate (15 to 22% of the net amount) minus any recoupable deductions. No wonder why you’re not seeing any YouTube money or your royalty payments are very low.”