How to Make Money on YouTube

Written by TMO Legal Interns Lauren Davis and Ariel Wiley
This information is current as of Spring 2014.

YouTube has become an excellent resource for artists to gain exposure and make a profit from their own songs and video content. There are a number of ways this can be accomplished; one way is by “monetizing” your videos through the YouTube Partner Program. The YouTube Partner Program equips creators with tools and programs to improve their skills, expand their audiences, and monetize their videos. Monetizing your video means you allow YouTube to place ads before, during, or at the end of your video. However, the money you make is not based on the number of views your video receives; your revenue is based on the traffic that the ads associated with your video receive when people view your video.

In order to make money on your videos, you cannot use any material copyrighted by someone else without permission. Consider reviewing copyright ownership basics.

When a video is uploaded to YouTube, Content ID will trigger automatically. Content ID takes your new video and compares it to other videos to check if any of the audio or visuals are protected by copyright. If YouTube finds that any of the audio or visuals are protected, then the video will not upload. If copyrighted material is uploaded and YouTube receives a valid notification of alleged copyright infringement, the video will be removed, and whomever uploaded the copyrighted material will receive a strike. If YouTube finds that you keep violating other people’s copyrighted material, you could lose your YouTube account permanently and possibly face third party legal action. If you have any questions concerning “copyright infringement” or “fair use,” it is best to consult a copyright or entertainment attorney before going forward. However, the simplest way to avoid copyright infringement altogether is to create everything yourself.

When you have a video, the next step is to upload the video and enable the video for monetization. Here is a step-by-step process for monetizing your YouTube Account.

  1. You must first have a Google account. If you do not already have a Google account, you can create one here.
  2. You must also have a YouTube channel. Now that Google owns YouTube, once you have a Google account, you will automatically be signed up for YouTube.
  3. To make money, you must have at least one video that qualifies for monetization. To qualify for monetization, a video must meet all of the following criteria:
    • Your content is advertiser-friendly.
    • You must follow the YouTube Terms of Service and Community Guidelines.
    • You must be able to provide documentation proving you own commercial rights to all audio and video content.
    • Your content must be original, or you must have already cleared the rights to any 3rd party content.
    • The images and the music must have been made entirely by the creator (you); that includes the music being played and the songs being sung.
    • If you choose to incorporate third-party content (content not created exclusively by you), then you must first clear the rights to use and monetize the content on YouTube.
    • Even if you created the music and visuals, if you signed over your “rights” to a third party, such as a record label, then you should consider whether you still own the copyrights in those works.
    • You may need to consult an attorney; otherwise, you run the risk of infringing on someone else’s copyright.
    • For more information about what type of content can be monetized, refer to YouTube’s article What Kind of Content Can I Monetize?
  4. Once you confirm that you have at least one video that qualifies for monetization, you must enable your account for monetization. To do this, go to your YouTube Account Settings, then click on the Monetization tab, then click Enable My Account. Follow the instructions to accept the YouTube Monetization Agreement.
  5. By accepting the YouTube Monetization Agreement, you are also agreeing to the Google’s Privacy Policy and YouTube’s Community Guidelines.
  6. If your YouTube account is approved for monetization, the next step is choose which videos to monetize and to enable ads on those videos.
    • Ads can be enabled two different ways, either when you upload the video, or after the video has been uploaded. 
      • To enable ads as you upload a video:
        • Click on the “Monetization” tab while the video is uploading, then click the “Monetize my Video” check box.
        • Select the ad formats you want to enable for your video, then click the “Save Changes” button.
        • You may be asked to submit information proving that you own all necessary commercial use rights to any or all content in your video.
        • If you monetize the video as you upload it, the video is set to private or unlisted, and will stay that way until you make it public.
      • To monetize your video after it has been uploaded:
        • Locate the video and click “Edit” or “$” next to your video.
        • On the “Monetization” tab in the video editor, click “Monetize my Video.”
        • Select the ad format you want to enable and then click “Save Changes.”
        • Your video will again go through the standard review process. You may be asked to submit information proving that you own all necessary commercial use rights to any or all content in your video.
        • Your video may be set to private or unlisted, and will stay that way until you make it public.
      • There are four different types of ad formats available:
        • Display Ads (Banners): These run across all areas of the site, except the Homepage. They are available as a 300x250 ad and appear to the right of a feature video and above the video suggestions list.
        • Overlay InVideo Ads: These are transparent overlay ads that appear in the lower portion of the video. These ads typically appear at the 15-second mark and can be closed by the viewer; otherwise, they will disappear automatically. InVideo ads generate significantly more money than some of the other options.
        • TrueView In-Stream Ads: These are seen at the beginning or middle of a video, and viewers have the option to watch the full ad or to skip after 5 seconds. Content creators are only paid when at least 30 seconds or the whole ad is viewed, whichever comes first.
        • Non-Skippable In-Stream Ads: These are ads you can’t skip that appear before, during, or at the end of your video. While non-skippable in-stream ads may generate more money, they may also cause more people not to watch your video.
        • More information about ad types can be found here.
        • In order to determine the best balance between video views and channel revenue, be sure to use the Ad Performance and Views reports in YouTube Analytics
  7. To start receiving payments, you must link an AdSense account to your YouTube account.

    • You will receive 55% of revenues recognized by Google from the ads placed with your videos.
    • Go to your YouTube Account Settings and click on the “Monetization” tab.
    • Click on the AdSense Association page, and you will be directed to AdSense.
    • At the bottom of the page, choose the Google Account you wish to use, and enter the password for that account.
    • Confirm the association and provide your billing information.
      • Google must approve your AdSense account before you are able to use it, which could take a few days.

      • IMPORTANT: YouTube will not start accruing your earnings until you link an AdSense account, so create an account as soon as possible after monetizing your videos.

      • However, after you link your AdSense account, YouTube may deposit a bonus in your account for your video monetization contribution prior to linking an AdSense Account.

    • After Google has approved your account, under the Monetization tab in your YouTube Account Settings, it should say that your AdSense account is approved.
    • By clicking on AdSense Settings, you will then be directed to the Google AdSense Online Terms of Service.
      • By accepting the AdSense Terms of Service, you are agreeing to the following (This is not a complete list; for your own knowledge and protection, you should read the AdSense Terms of Service for yourself before accepting.)
        • Basic provisions:
          • You must not have previously had an AdSense account that was terminated or disabled for breach of agreement or invalid activity.
          • You agree to allow Google to place ads and other content (including Google search boxes and other links) on your websites, mobile applications, media players, mobile content, and other “properties.”
          • Each individual is allowed only one AdSense account.
          • You must be at least 18 years old.
          • You agree to the AdSense Program Policies and Google Branding Guidelines.
  8. How does AdSense work?
    • Payment
      • You will receive a payment based on the number of valid clicks on Ads displayed with your videos, the number of valid impressions of ads displayed on your videos, and other valid events performed in connection with the display of ads on your videos.
      • Google will pay you by the end of the calendar month following any calendar month in which the balance in your account is equal to or greater than the payment threshold.
      • You cannot enter into an agreement with any third party in which that third party receives these payments instead of you or receives any other financial benefit from this agreement, unless Google agrees in writing.
      • Payments can be withheld or deducted based on any invalid activity by the advertiser or other third parties.
      • If you dispute any payment that was made to you or withheld from you, you must notify Google in writing within 30 days of any such payment. IMPORTANT: If you do not notify Google within 30 days, you can no longer make any claims about the disputed payment.
      • If an advertiser who has ads on your videos defaults on its payments to Google, Google may withhold your payments or take back money already deposited in your account that relates to that advertiser.
    • Termination
      • If you want to stop using AdSense, you can terminate the agreement at any time by following the account cancellation process.
      • Your account will be considered terminated within 10 business days of Google receiving your notice.
      • At the time of termination, if your earned balance meets the payment threshold (is $100 or more), Google will pay that balance within 90 days after the end of the calendar month in which you terminated. However, if at the time of termination, your balance does NOT meet the threshold (is below $100), Google will NOT pay you the balance. In other words, if your balance is one dollar below the minimum amount, you will not get any of that money if you terminate at that time.
  9. Once you have set up your AdSense account, you will need to choose a form of payment. To do this, go to the Monetization tab in your YouTube accounting settings, and click on AdSense Settings. Then click on Payment Settings.

    • The primary form of payment in the U.S. is EFT (Electronic Funds Transfer). This means that Google will deposit payments directly into your bank account after you provide your banking information.
    • After you’ve submitted your payment information, you may need to provide tax information. To do this, go to the Payee Profile tab and click “Submit Tax Information.”
    • There are certain thresholds of payments you must meet in order to start receiving income.
      • The first is the Address Verification Threshold, which is $10. Once your account has generated $10, Google will mail a Personal Identification Number (PIN) to the address you provided in your AdSense account. You must enter this PIN into your AdSense account before Google will issue any payments.
      • Once your PIN has been entered, the next threshold you must meet is the Payment Threshold, which is $100. If your account generates $100 by the end of a calendar month, YouTube will issue a payment to you by the end of the next calendar month.
      • If your account has not generated $100 or more by the end of a calendar month, the account balance rolls over to the next month and accrues until it meets or exceeds $100.
      • You can track your balance on the homepage of your AdSense account. More detailed information about your earnings and payments can be found under the “Performance Reports” tab.

There are no specific number of “clicks” that will guarantee that you will receive a certain dollar amount; the value of each click is based, in part, on the type of advertisement. Advertisements placed with your video are chosen automatically based on contextual factors relating to the content in your video, including your video metadata and how you categorize your video. YouTube does not control the choice of ads manually and does not guarantee that specific ads will be placed with your videos. If you wish to cut out the middle man, you can secure your own sponsorship through product placements. This is more successful once you have a substantial audience. Look for sponsors who share a similar audience, and could benefit from advertising with your content. However, be aware that if the product placement conflicts with ads that YouTube sells, YouTube has the right to disable monetization on videos with such product placement.

If you do not wish to use AdSense, another option is to hire a distribution company, such as CD Baby or TuneCore, to handle your YouTube payments. If you already use a distribution company, you can let them handle your YouTube payments as well. The advantage of this option is that a distribution company can also collect royalties when other people use your music in YouTube videos. For an example, look at CD Baby’s YouTube Syncing Program.

YouTube pages with the most subscribers and viewers tend to make the most money; therefore, it is important to increase the traffic on your YouTube page. Musicians increase their exposure when they attach their YouTube page or videos to a personal blog, website, or other social media outlets. If you have a high quality music video, consider placing your video on VEVO to increase your overall exposure. VEVO is another video hosting service that is owned and operated by Universal Music Group, Google, Sony, and Abu Dhabi Media. To get a video on VEVO, clients pay a yearly fee of $20. While it takes 2-3 weeks for your content to go live, once it does, your content will be accessible through YouTube and available in over 200 countries.

Artists with high quality original content should also consider submitting their songs to music licensing sites such as Audiosocket. This site assembles a roster of exceptional music from all genres in order to license the songs out to personal or global projects. Artists who are interested simply upload 4 MP3 tracks and in 60 days, if your music is approved, you will receive a notice and be invited into the catalogue. This is another opportunity for an artist to increase his or her popularity on and off YouTube.

YouTube is a fantastic source for artists looking to increase their exposure through the internet while potentially getting paid in the process. In order to achieve this, remember, the creator of the video must own or have already cleared the rights to all visual and audio material in the video. If you have any questions about copyright, it is best to consult a copyright or entertainment attorney.