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What’s a YouTube phenomenon worth?

Rico Gagliano Apr 16, 2010

What’s a YouTube phenomenon worth?

Rico Gagliano Apr 16, 2010


Kai Ryssdal: Marketplace is, of course, a serious news operation. But we who work here are not immune to those e-mails. The ones where a friend sends you a link to a YouTube video of a parrot riding a kitten like a pony? We click. We watch. The difference is that when we business news-gatherers notice a video has been viewed millions of times? We say, “Man, how much do you suppose that’s worth?”

Here’s Marketplace’s Rico Gagliano.

Rico Gagliano: Two years ago, David DeVore was a humble stay-at-home Dad. Today?

David DeVore: I am, um, running a business based on my son’s viral video, “David After Dentist.”

He’s laughing because, at first glance, the video’s not something you’d think could sustain a business. DeVore used a simple Flip cam to film his 7-year-old son, David, right after the kid got a tooth removed. The dentist’s drugs had not fully worn off.

David Jr. on YouTube video: Uhh… is this real life?

DeVore: Yes, this is real life.

The clip is funny, kind of sweet. And it’s been watched more than 55 million times. DeVore says there’s a good chance this two-minute video will probably end up paying for David Jr.’s college education.

DeVore: We’ve made in excess of $100,000. Significantly over that, you know, low six figures.

So, where did that money come from? Well, there is, predictably, merchandising. The punky fashion store Hot Topic sells “Is This Real Life” t-shirts. The DeVores get a cut of those sales, and sell their own t-shirt design online.

DeVore: Something that’s a little bit more marketable to everybody, because the Hot Topic shirt was purple. So I won’t even wear that one.

There’s also licensing money, from, for instance, the TV manufacturer Vizio. The company paid to use a snippet of “David After Dentist” in its Super Bowl commercial.

David Jr. in Vizio ad: Is this real life?

But most of DeVore’s revenues come from YouTube itself. And he’s not the only one making a regular income from the site.

Aaron Zamost: Some of the more popular users at YouTube apply to be partners.

That’s YouTube spokesperson Aaron Zamost. He says partners range from big movie studios to individual users, like DeVore, who strike advertising deals with the site. YouTube gets permission to sell ad space next to or during the user’s videos.

Zamost: And then we share with them the revenue generated as a result. And in all instances, we give these users, who’ve now become partners, the majority of the money.

Sweet, right? But before you make plans to pay your mortgage by posting videos, consider YouTube has accepted only around 10,000 partners. And to become number 10,001, it may not be enough to have a video millions of people have seen. It still has to be deemed worthy by algorithms, which put a premium on how fast a video lures viewers.

Zamost: Let’s imagine a video has 10 million views on YouTube already, and it gets another 100,000 views. That’s a lot, but it’s not a humongous increase. Imagine a video has 5,000 views, and gets 100,000 additional views. That’s a real acceleration in view count. So our algorithms don’t really look at just raw views.

Ultimately, only a few hundred individual users manage to make big money as partners, as in, thousands of dollars a month. And then, there’s the one-in-a-million user who hits a bigger jackpot.

“Fred” on YouTube video: Hey it’s FREEEED! And it’s Father’s Day! I’ve never seen my dad before, and I think I’m gonna write him a letter!

Do not adjust your radio — the voice you’re hearing is purposely that annoying. It’s a character named “Fred,” the creation of 16-year-old Lucas Cruikshank. His homemade Fred videos have generated almost half a billion views on YouTube. And this summer, cable channel Nickelodeon will premiere “Fred: The Movie.”

Its producer, Brian Robbins, says Cruikshank will share the revenues from the franchise, which includes a sequel already in the works. That could be a huge sum, if the young viewers who make every Fred video a YouTube hit show up for the movies.

Brian Robbins: Well, that’s the billion-dollar question, right? Do people who watch something on YouTube, will it translate to regular media?

If the answer is yes, expect more producers trawling YouTube for the next Hollywood hit, and more living room auteurs looking to be among the very few to cash in.

In Los Angeles, I’m Rico Gagliano for Marketplace.

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