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How Do YouTube Royalties Work?

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Estimated reading time: 9 minutes

YouTube royalties are generated from YouTube ads and subscriber fees from YouTube Premium and YouTube Music. The bad news is you need at least 1,000 subscribers to your artist channel and 4,000 public watch hours to be eligible for them. The good news is YouTube is home to a thriving music community full of opportunity; they report over two million users logging in per month and one billion hours of content being watched daily.

Types of YouTube royalties

Revenue on YouTube comes from three sources: advertising revenue, channel subscriptions, and Super Chat purchases.

Advertising revenue

Most YouTube royalties are generated from ads placed on your videos. The royalty rate varies based on whether the listener is using YouTube Music or regular YouTube. Creators in the YouTube partner program will also receive royalties based on the percentage of their viewers who are YouTube Premium and/or YouTube Music subscribers.

Channel memberships and Super Chat

Listeners can also purchase a membership to your channel if you have over 500 subscribers. Memberships usually offer a selection of perks: exclusive content, members-only chats, and more.

Super Chat allows listeners to purchase live chat messages and pin them to the top of a live chat feed. YouTube pays eligible creators 70 percent of the revenue from memberships and Super Chat (minus taxes).

Collecting YouTube royalties

To collect YouTube royalties, your account must be eligible for them, and YouTube Analytics keeps track of your progress towards this. First, you’ll need to create a Google AdSense account through YouTube Studio, as that is where you will eventually be paid.

Once you are eligible for royalties, you can join the YouTube Partner Program so you can receive a cut of subscriber and membership fees. Third-party services exist that can collect YouTube royalties for you, but they will charge fees; make sure you vet any service to ensure it’s legitimate. Reliable organizations like Songtrust collect all kinds of music royalties worldwide.

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Eligibility criteria for monetization

To monetize your account, you will need to have an AdSense account, have no active community guidelines strikes, and have 1,000 subscribers with 4,000 valid public watch hours in the last 12 months (or 10 million views on Shorts).

This is often not easy to achieve. Even accounts with many subscribers can struggle to hit the 4,000 hours criteria. Basic social media and music promotion strategies applicable to any platform can help: a consistent posting schedule, engaging with comments, and cross-posting your YouTube content to different platforms. And remember, your focus shouldn’t be just numbers; the goal is to build a community around your music, which will lead to more income in and of itself.

Distribution of royalties

YouTube royalties come from four main streams: performance royalties, mechanical royalties, Content ID revenue, and sound recording owner royalties. The first is paid to the songwriter through their performing rights organization (ASCAP, BMI), the second through an administrative publisher or third-party collector, and the last two through AdSense.

Once you have started to receive royalties, nothing will be sent until you meet the payment threshold. This number varies depending on your location; in the USA it is $100. When you’ve hit the payment threshold, your money will be deposited in AdSense one month later. You’ll need to submit tax and identity verification information — AdSense will not pay you without it.

YouTube’s Content ID system

To protect copyright holders, YouTube invented Content ID, an automated system that scans videos for copyrighted content. If Content ID finds a match in a video, the video poster generally receives a notice that the video has been monetized by the copyright owner and they can no longer monetize it.

You are eligible for Content ID if you can prove you are the copyright owner of your content. Content ID royalties are calculated at a per-stream rate and paid via AdSense. If you find that your music is being used without permission, you can submit a copyright infringement claim to have that video monetized on your behalf.

Setting up Content ID

Once you have submitted proof of ownership and completed a Content ID agreement, you can register your assets. An asset is a collection of info about a piece of intellectual property; for a YouTube video, this includes a reference file (the video itself), metadata, ownership info, and the policy to be applied if matching content is found. YouTube Help has extremely detailed instructions on how to manage your assets.

When a match is found, YouTube applies your preferred policy to monetize, track views of, or block the video. You can create a custom policy based on location or have one blanket policy for the whole world.

Managing claims and disputes

If your video receives an incorrect Content ID claim, you should file a claim dispute within five days. Monetization will continue on the video during the dispute, but the royalty payments will be held until the dispute is resolved.

The claimant has 30 days to respond to your dispute, at which time they can either release the claim, reinstate the claim, submit a takedown request, or let the claim expire by doing nothing. If they reinstate the claim, you can appeal the decision.

The role of music licensing on YouTube

29 Tips guideThere is much confusion about the licenses required for YouTube videos. This is mainly a concern if you are trying to post cover songs and monetize them (not recommended for smaller artists). If you are posting original music videos, no music licenses are needed. If you are looking for someone else’s music that you can also monetize, YouTube has a service called Creator Music which is a growing catalog that can be licensed and often monetized by you at 100 or 50 percent. This service is currently only available to YouTube Partners in the US.

There are two types of licenses that apply to YouTube: the master use license and the synchronization (or sync) license. The master use license is for use of the original master recording of a song; this is applicable only if you are using other people’s pre-recorded tracks. The sync license grants permission to use music in video, TV, or film — this is what’s needed to use your recording of someone else’s song in a YouTube video.

Sync licenses for music videos

YouTube’s terms of service says you must “own or have the necessary licenses, rights, consents, and permissions to publish content you submit.” If you see a cover by a major band on YouTube, they have paid for a sync license.

If your account is still too small to monetize your videos, you probably don’t need one; it is a grey area, legally, but no one posting YouTube covers from home is getting sync licenses as the licenses are expensive and often impossible to obtain. Generally, all that happens is Content ID informs the copyright holder, who will monetize your video for themselves. Once you have reached the point of monetization and your views and likes are in the thousands, you will need to consider getting a sync license if you want to monetize your covers.

Mechanical licenses for cover songs

You only need a mechanical license for your song if you are planning to release an audio-only version i.e., a CD, LP, or streaming. You do not need a mechanical license for a YouTube video, even if the video is a blank screen — it is all covered by the sync license.

Tips to maximize your YouTube royalties

Increasing your views and engagement should not only maximize your YouTube royalties, but you’ll need to do this to even qualify for monetization. The same social media strategies apply here as anywhere: create exceptional music, promote it on all platforms, keep your visual brand consistent, engage followers, and post regularly.

This is no guarantee of success, but it will give you a chance to be heard above the noise. Consistent content keeps your audience’s attention and noticing your fans is crucial to building an audience.

Leveraging YouTube’s algorithm

Optimize your titles, tags, and video descriptions for the YouTube algorithm. Titles need to be succinct while accurately describing the video. Also, make sure your thumbnail image is clear, simple, and aimed at your target audience.

The more you post, the more the YouTube algorithm rewards you. YouTube content creators recommend posting once a week, if not more; once a day at the start will help you gain momentum. When people start viewing your videos, use YouTube Analytics to break down the demographics and see what time of day people watch so you post more effectively.

Collaborations and cross-promotions

To boost your YouTube presence and your YouTube royalties, collaborate with other YouTubers. Don’t just collaborate with someone because they have a large following; consider what you could bring to the party as well as the possible synergy of your audiences. Pitch them interesting content ideas and harness the power of strange juxtapositions, such as collaborating with those in wildly different fields.

When you do collaborate, promote it on multiple platforms, allow embedding so the video can be posted to websites and blogs, and upload two different videos — one to each of the creators’ channels — so both audiences can discover the collaboration.

Dealing with copyright strikes

A copyright strike is a takedown notice from the copyright owner. If you receive a copyright strike, don’t panic. If it’s your first strike, you can complete Copyright School — a series of videos and questions after which the strike will be removed. The strike will expire after 90 days no matter what or you can submit a counter notification if you feel the strike is an error. You can also reach out to the complainant for a retraction. After three copyright strikes, you can be permanently banned, so make sure to address it promptly if it happens.

To avoid copyright strikes, make sure you are following the best practices of using copyrighted content. If your account is monetized, you’ll need to make sure you have the appropriate licenses and/or permission from the rights holder.

Adapting to YouTube’s evolving policies

Like all things online, YouTube is constantly evolving its policies. YouTube just announced generative AI tools for creators and simultaneously a marking system to flag AI-generated content. They intend to punish those who don’t disclose their use of AI, especially as it relates to deep fakes. Follow YouTube on social media to make sure you know their latest tweaks.

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Chris Huff

About Chris Huff

Chris Huff has been a professional singer, multi-instrumentalist, songwriter, and producer for over 25 years. He has worked as a sideman with Peter Yarrow (Peter, Paul, and Mary), Echo and the Bunnymen, Chuck Hammer (David Bowie, Lou Reed), and Tom Kitt (Broadway composer of Next To Normal). Chris also wrote liner notes for David Bowie’s Live And Well CD, and his full-length album, 'bout Time is available on iTunes.

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