Remix Compilation: Ways of Making Money

Everyone wants to know the secrets of the YouTube stars—how did they make successful careers out of YouTube, how do they make money and what advice do they have for hopefuls looking to follow in their footsteps? Tubefilter’s ‘Secrets if YouTube Superstars’ panel at CES shed some light on these questions. Tubefilter’s editor and co-founder, Marc Hustvedt, moderated the panel, which was made up of YouTube megastars iJustine, Joe Penna (aka MysteryGuitarMan), Phil DeFranco, Freddie Wong and Brandon Laatsch.

You can watch the full thirty-seven minute panel in the video below, but I’d like to take a little time to recap some of the most interesting points that were brought up. I think that Hustvedt asked great questions, leading the panelists to shed some very interesting light on the world of YouTube as a business.

Putting In The Work

I think that the most important thing that can be gleaned from the ‘Secrets Of The YouTube Stars’ CES panel is that you can’t go anywhere on YouTube without putting in lots and lots and lots of work. There was a general consensus that these guys work an average of about 80 hours a week. That’s an average of about 11.5 hours a day with no weekend! And these guys have already made their YouTube channels a success, so just imagine how much work goes in to making a name for yourself when you’re starting out at the bottom.

iJustine says, “This is our life. Every second of the day you’re working, essentially. If you’re not posting videos you’re still tweeting, your updating Facebook or you’re updating all these social networks to tie back to your videos and keep people updated on what you’re doing.” YouTube stars never sleep—it’s a 24/7 job. Brandon Laatsch says, “We’ve pulled more all nighters in the last year than we did all throughout college.” But what’s important to note is that these guys love their job. If you have the passion and the drive, and you’re willing to put in the hours it can be incredibly rewarding.

Bringing Home The Bacon

The question on everyone’s mind is, how do YouTube stars make money? The panelists are all paying the bills with money they make from YouTube videos, but how do they do it?

Joe Penna explains the two major ways that YouTube stars make money, in addition to the revenue that they earn through YouTube advertising. One of these ways is through working with brands. The other is through merchandising.

Penna, iJustine and DeFranco all have quite a lot of experience working with brands. They seem to agree that working with brands is fantastic, as brands trust them to take creative control and allow them the budget to make bigger, better videos than they could otherwise. Laatsch also pointed out that over the last year or so viewers have become a lot more accepting of brand deals. At first there was a lot of name calling (i.e. “You’re a sell out!”), but now that viewers understand that this is what these guys are doing for a living they get that branding is a good thing as it enables them to make better videos. All the YouTubers stressed that they incorporated branding into their videos in an unobtrusive way as to not freak their viewers out.

YouTube also helps with revenue through grant programs. They helped DeFranco branch his single channel out into the six-channel DeFranco Inc. and they also sponsored Freddie and Brandon in a project in which they drove around in an RV for a month, making videos with their fans.

Personality

The most important thing that I think can be gleaned from this panel for wannabe YouTube stars is the importance of personality. If you take a look at the top YouTube channels nearly all of them are supported by a personality. MysteryGuitarMan makes music videos, but he’s sure to speak directly to his viewers in each and every one of his videos as well. If you have a strong personality your viewers feel like they know you personally and this is one of the biggest keys to YouTube success.

DeFranco says that YouTube stars are different from television or movie stars because you may want to catch a glimpse of a television star but you’d like to sit and chat over a beer with a YouTube star. You feel like you are friends with them, they influence you and they can’t wait for you to put out another video.

I’d also like to point out that this is fantastic for branding. Brands can tap into an audience of millions when they turn to YouTube stars for promotional purposes and these millions trust these stars and are completely engaged and influenced by them. This is much more direct and effective advertising that television advertising, and cheaper. It’s a lot more bang for your buck!

Check out the full panel below to find out more from five of YouTube’s biggest stars. What did you find most interesting about the panel?

What made this project so successful? After all, there are other iPod Nano projects. And it's a wristwatch, which even with the addition of a Nano, might not be the coolest or most necessary of accessories.

Bryce Roberts, the Managing Director of O'Reilly AlphaTech Ventures, points to some reasons he's identified that contributed to the success of the Lunatik/TikTok fundraising endeavor. These lessons that can be seen in other successful Kickstarter projects (such as Diaspora), but they're also applicable in many ways to more "traditional" funding efforts.

Tell a personal story

The Lunatik/TikTok "pitch" wasn't a bulleted list of qualifications or clients. Rather, the members of the team "told personal stories that created a connection to the project that had nothing to do with their professional pedigree." While this sort of storytelling doesn't boost their professional credentials, Roberts argues, it does give the entrepreneurs a certain personal authority and helps to connect them to funders and potential funders in a different way.

Roberts argues that the best fundraising pitches always emphasize this personal aspect. "It's a given," he writes, "that if I chose to invest in you I believe I can make money, but there are the intangibles around personality, perspectives, and life experiences that will make a potential funder more likely to want to believe you."

Tell the product's story

If you watch the TikTok video (below), you'll see the product is featured throughout. This demonstrates what the product can do - and that it can do what the startup promises. The video also demonstrates the larger potential of the product. These might be "small, nice little features" that some investors would dismiss. But with the crowdfunding model, the right storytelling around this seems crucial. "The difference between a nano strapped to a wristband and a premium quality, highly designed, customizable piece of wearable technology is simply a matter of how you tell the story."

But even when you aren't using a site like Kickstarter to raise money, it's crucial that your product be front-and-center in your presentations.

Give rewards and issue progress reports

Investors, by definition, invest in order to make a financial return. Nonetheless, argues Roberts, you should offer more than simply the promise of "making money." These sorts of non-financial rewards can be personal and personalized. By design, Kickstarter tells its users, "the best way to inspire support is to offer people great rewards. Everyone loves limited editions, one-of-a-kinds, and fun experiences (parties, screenings, balloon rides!). Spend some time brainstorming your rewards and people will respond. No one needs another coffee mug."

And as your project and your company are constantly evolving, it's good to keep investors and potential investors up-to-date on your progress. In the case of TikTok, the creators even filmed themselves in China when they traveled to the factory where the watch kits were being made. But the same could be said for all funding relationships; keep your investors apprised of "how you're making progress and how your story is continuing to unfold in a big and important way."

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Thursday, January 13, 2011

Ways of Making Money