Online video is in a state of paradox.

Video is the fastest growing segment of the Internet and people are racing to cash in.

But most online video sharing sites are NOT making money. Even You Tube, the undisputed king of online video, loses money.  You Tube reports 10 times the number of video views of any other video sharing site, yet profits are rare.

How can something so popular not be a cash-generating machine? Well, the reasons are many.  Everything from it costs a bundle to host huge video files to the fact that online video is a tricky thing to monetize.   There is no advertiser on the planet willing to be associated with gross junk like Two Girls and One Cup, even if it has gotten million of views!

So is the promise of making money online with video just a pipe dream?

Hardly.

But it’s not a sure thing either.  A lot depends on how you go about it.

Let’s examine two of You Tubes biggest stars, people who ARE making good money producing video.

Michael Buckley of What the Buck fame and Lisa Donovan, known online as Lisa Nova.  Both are making six-figure incomes off You Tube.  Both have zillions of views and are part of You Tube’s year-long Partner Program that shares advertising revenues with content providers.

Only a paltry 3% of You Tube videos have such advertising though because You Tube is very picky about who can joint the partner program.   Not only do you have to already have zillions of views, but you have to have what You Tube deems appropriate content, whatever that is.

I applied for the You Tube partner program and was turned down because my most viewed video stands at a measly 15,800.   It was my first uploaded video and the subject is video editing.  The first 10 seconds suffers from digital video breakup, but the rest is real good, if I do say so myself!

You Tube told me I should instead pay them to have my videos appear at the top of their rotation for my keywords.  That way I could build a bigger audience and qualify eventually. Pardon my cynicism that perhaps You Tube just want to make money off me because there was certainly no guarantee that they would ever approve me.

Donovan and Buckley both worked very hard to get to the top of You Tube. Both say it took about a year of heavy promotional work before they got much notice at all.  Newcomers just coming in today will have an even harder time, since the masses of wanna-be stars keep multiplying.

In addition to the partner program, one can make money with online video by using product placement and by finding corporate sponsorships yourself.     Cory Williams, known on You Tube as smpfilms, says about half of his 17 to 20 grand a month comes from self-generated corporate sponsorships.  The remaining half comes from the You Tube Partner program.

Product placement and other in-side-the-video advertising is growing now that the technology of making videos “clickable”  is here. If you upload a video demonstrating the proper golf swing, you can place an affiliate link on top of a shot of your favorite golf club.  If a viewer clicks it, they will be whisked to a website where they can purchase the golf club.

You Tube calls this technology annotations.  Other companies provide the same basic thing, and many are actually ahead of You Tube in terms of implementation and functionality.  The best I have found so far in this department is a website called veeple dot com. You can try veeple for free.

At this point in time, the best and easiest way to actually make MONEY from online video is to use video to promote something else you are already selling. Advertise your site with video and do product demonstrations on video.  Provide viewers with generalized information via video.  This way, you are not making money off the video itself but rather using video as an integral part of your marketing strategy.

Of course you can also produce an informational video that you sell.  Video makes a great informational product as most people would rather watch a video about how to do something than read a PDF.

Video on the Internet is here to stay.  You can indeed make money with online video and no doubt the opportunities for doing so will only grow from here.  But just like in Hollywood, the number of big stars is dwarfed by the number of people who try, but just don’t make it.

Thanks for reading Video Production Tips

Lorraine Grula

Internet Video Gal

Related posts:

1. Get Your Video Seen on You Tube, Lisa Nova Contest
2. How to Make Money at Video Production part 2
3. How to Make Money at Video Production
4. You Tube Video Winners
5. Online Video Viewers: Not Very Patient!