With over two billion active monthly users, YouTube has become a digital powerhouse that shows no signs of slowing down.
According to Similarweb Top Website Rankings, it’s the second most popular website globally, just behind Google. The platform’s revenue is generated through ads, which has seen a steady increase in recent years, reaching $29.24 billion in 2022, up from $28.84 billion the previous year.
But YouTube isn’t just a platform for entertainment, it’s also an investment opportunity for savvy investors looking to generate returns. As of 2023, its estimated net worth is $183 billion.
Forbes named MrBeast as YouTube’s highest-earning creator in 2021, earning an impressive $54 million. And while it takes some time and effort to make money with YouTube, the rewards can be significant.
In this article, we’ll dive into the world of YouTube investment and explore some of the best strategies for success.
Table of Contents
1. Invest in Alphabet, Inc. (Parent Company of YouTube)
Unfortunately, buying just YouTube stock isn’t an option, but don’t worry, we’ve got some good news for you! You can invest in Alphabet Inc., YouTube’s proud parent company.
Alphabet Inc. can be found on the Nasdaq exchange, and you can choose between two exciting ticker symbols: GOOGL and GOOG. What’s the difference, you ask? Well, the GOOGL ticker is associated with Alphabet’s class A shares, and GOOG is linked to its class C shares.
Now, here’s the juicy bit: the difference between these two classes of shares is in the voting rights. GOOG shares may be shy and have no voting rights, but GOOGL shares are confident and come with one-share-one-vote.
By investing in Alphabet, you’ll not only get a piece of the YouTube pie, but you’ll also gain exposure to other Google-owned companies, such as Google Cloud, Google Ads, and Google Play.
Pros:
- Google has a market share of over 90% in search across many parts of the world, which grants it significant market power.
- Alphabet has maintained its operating margins within the range of 25% to 35%.
- The company’s healthy financial position allows it to return funds to its shareholders through buybacks.
Cons:
- Although YouTube is a major player in the online video industry, its contribution to Alphabet’s overall revenue is limited. This means that even if YouTube experiences growth, it may not have a significant impact on the overall value of Alphabet’s stock.
- Investing in Alphabet stock, which includes YouTube, comes with the risk of being affected by broader market trends and fluctuations. This means that if the market experiences a downturn, Alphabet’s stock price may also decrease, regardless of YouTube’s performance.
If you want to learn more about how YouTube generates revenue, you can check out our article on the YouTube business model.
2. Partner with Content Creators
Another lucrative investment opportunity is to partner with YouTube content creators. Building a YouTube channel isn’t cheap, with startup costs ranging from $300 to $2000. Here’s a breakdown of the expenses:
- Camera: A basic 4K camera costs between $120 and $500.
- Microphone: YouTubers use lapel, shotgun, and USB mics, priced from $15 to $500+.
- Tripod or stabilizer: Expect to pay $15 to $150 for most tripods.
- Lighting: Ring lights are $50 to $100, while softboxes range from $40 to $200+.
- Editing software: iMovie is free, but professional options like Final Cut Pro X cost $300, Adobe Premiere Pro is $30 to $50 monthly, and Pinnacle Studio has a one-time $50 fee.
The priciest aspect is video editing, with experienced editors charging $50 to $150 per hour, depending on the project’s complexity.
Keep in mind that creators need 1000+ subscribers to join the YouTube Partner Program, so they won’t earn income before that milestone.
That’s where your financial support comes in! By helping creators with funding, resources, or expertise, you can share in their success as their audience grows.
You can partner with creators in two main ways:
- Sponsorship: Offer financial support in return for advertising or product placement in their videos. This can boost brand awareness and drive sales for your products or services.
- Equity Investment: Invest directly in a creator’s business. By providing capital for equity, you can share in their revenue and potentially earn a return on investment as their channel expands.
Pros:
- You can work closely with creators to produce high-quality content that appeals to their target audience. By being hands-on, you have more influence over the final product.
- You can choose who to partner with, negotiate terms, and monitor performance closely.
- You can have an opportunity to build relationships and expand your network in the industry.
Cons:
- If a creator’s content doesn’t perform well or if they face personal or professional challenges, it could negatively impact your returns.
- It requires active management, including ongoing communication, monitoring performance, and adjusting strategies as necessary.
3. Develop Your Own YouTube Channel
If you’re interested in starting your own YouTube channel, you’re in for a fun and potentially lucrative journey. By creating engaging content, attracting subscribers, and implementing monetization strategies, you can earn money and even establish your own personal brand.
The good news is that setting up a new YouTube channel is a straightforward process. All you need is a Gmail account, which you can use to associate your new channel with your email address.
- Sign in to YouTube
- Click your profile picture (top right, desktop version)
- Choose “Create a Channel”
- Pick a name (use your email’s or create a custom one)
- Fill out the “about” section
- Add a cover photo and profile picture
- Upload your first video
To improve your YouTube channel, consider adding playlists, filling out your profile with more details, customizing your account settings, and linking to your other social media platforms. For more information, you can check out this guide on how to create a Youtube channel.
Now, here are some ways to monetize a YouTube channel:
- Ad Revenue: You can turn on ads on your channel using the YouTube Partner Program and earn money based on how many views and ad interactions your videos get.
- Sponsored Content: You can team up with brands to create sponsored content or product placements in your videos in exchange for payment.
- Affiliate Marketing: By promoting products or services through affiliate links, you can earn commissions on any resulting sales.
- Merchandise Sales: If you have a loyal following, you can sell branded merchandise like clothing or accessories to your audience.
- Paid Subscriptions: You can offer exclusive content to paying subscribers using YouTube’s channel membership feature.
Pros
- You have full control over the content you create, the branding you use, and how you monetize your content.
- You have the opportunity to build a personal brand and cultivate a loyal following.
- Building a successful YouTube channel can open up multiple revenue streams and the potential for passive income. You can earn money through advertising revenue, sponsorships, merchandise sales, crowdfunding, and more.
Cons
- Creating and maintaining a YouTube channel takes time and effort. From planning and scripting to filming and editing, the process can be time-consuming.
- Building an audience requires consistent high-quality content, effective promotion, and engagement with your viewers. Keeping viewers interested and engaged over time requires ongoing effort and creativity.
- Starting a YouTube channel involves an initial investment in equipment, marketing, and other resources. High-quality video and audio equipment can be expensive, and effective promotion and marketing can require a budget.
The Bottom Line
Investing in YouTube presents a promising avenue for investors looking to tap into the expanding digital media landscape.
The platform’s extensive reach and various investment strategies, including buying Alphabet, Inc. shares, partnering with content creators, or starting your own channel, provide ample opportunities for potential gains.
However, it is crucial for investors to carefully assess their investment objectives, risk tolerance, and desired level of engagement to ensure they make the most suitable decision.
