How We Make Money on YouTube with 20M Subs

Summary

Highlights

• Kurzgesagt's journey started from its founder dropping out of high school and being inspired by a unique teacher. 🎓
• The channel significantly monetized through Patreon and the launch of its online shop. 💰
• 2015 marked the year when Kurzgesagt began seeing profits, leading to hiring more team members. 👥
• The online shop, a major revenue stream, kickstarted with the launch of Kurzgesagt's calendar in 2016. 📅
• Institutional sponsors, including those related to Bill Gates, contribute to 10% of the channel's revenue. 🏛️

Key Takeaways

• Kurzgesagt has evolved from a passion project to a full-fledged animation studio over the past decade. 🚀
• The channel relies heavily on revenue from its online shop, which accounts for 40% of its total income. 🛒
• Patreon support and YouTube ads play significant roles in funding Kurzgesagt's science communication efforts. 📈
• The content is crafted to inspire curiosity, simplify complex subjects, and promote a positive view of the future. 🌟
• Despite facing challenges like high production costs, Kurzgesagt remains committed to offering free educational content. 📚

Overview

Chapters

• 00:00 - 01:00: Introduction and Background The chapter "Introduction and Background" provides a brief overview of Kurzgesagt, a prominent science channel on YouTube, celebrating its 10th anniversary in 2023. The chapter outlines three key aspects: the channel's history, its financial model, and its core values. It begins with the foundation story of Kurzgesagt, which traces back to the early days when its founder Philipp decided to leave high school as a teenager, setting the stage for what would become a successful digital platform.
• 01:00 - 02:00: Early Challenges and Growth Philipp was initially disinterested in learning, finding it futile, until he encountered a unique teacher at a school for dropouts. Her distinctive teaching approach, focusing on connections and storytelling, inspired Philipp to learn eagerly for the first time. This experience was pivotal for him. Kurzgesagt endeavors to duplicate such enlightening experiences, proving that with a good story, nothing is ever boring.
• 02:00 - 03:00: Financial Evolution and Team Expansion The chapter begins with the narrator discussing the influence of a teacher who inspired Philipp to pursue a high school degree, study history and design, and eventually start Kurzgesagt as a passion project. This initiative was motivated by a fascination with Crash Course World History. At its inception in 2012, YouTube was more idealistic and less commercial, a platform where making a living from complex videos was impractical. Despite these challenges, the initial goal was to achieve creative freedom, which required personal investment since no outside funding was available for Kurzgesagt's early projects.
• 03:00 - 04:00: How Kurzgesagt is Funded The chapter titled 'How Kurzgesagt is Funded' delves into the origins of Kurzgesagt as a personal project born out of intrinsic motivation and collaboration among university friends. Initially juggling client work with developing the channel, the team worked long hours. The turning point came with the advent of Patreon and sponsorships, alongside an increase in YouTube views. By 2015, the channel became financially self-sustaining. To cope with burnout and continue growing, the team expanded by hiring more friends and forming a legal entity.
• 04:00 - 05:00: Revenue Sources Explored The chapter "Revenue Sources Explored" discusses the evolution of a company that started with no experience in business. Initially, there was no intention for growth, but over time, the project grew significantly. A decade later, the company has become a large animation studio with offices in Munich and Berlin. The chapter emphasizes the need for sufficient revenue to support the livelihoods of its employees and mentions that with increased workforce, they could stop overworking and focus on improving.
• 05:00 - 06:00: Institutional Sponsorships The chapter "Institutional Sponsorships" delves into the financial challenges and strategies related to producing high-quality work. It highlights the operational costs such as salaries, which run into millions, and other expenses like licences, taxes, and rent for a team of over 60 employees and freelancers worldwide. The key problem discussed is sustaining free publication of their work amidst these high costs. The solution explored involves how the organization finances itself, particularly through sponsorships.
• 06:00 - 07:00: Research and Content Development The chapter discusses the evolution of funding sources for a project from 2015 to 2022. Initially, agency work was the primary source of income. Over the years, revenue has fluctuated due to changes in advertising revenue and sponsorships. A significant shift occurred with the introduction of a shop, which grew substantially after a calendar launch. Presently, 62% of revenue is generated either directly or indirectly from the audience through video ads, Patreon support, and shop purchases.
• 07:00 - 08:00: Values and Vision This chapter discusses the significant sources of income for the business, focusing primarily on their shop which has been the largest contributor, accounting for 40% of their income over the last eight years. The shop's growth accelerated after the successful publication of their first calendar in 2016, leading to the production of various science-related products. Additional revenue streams include YouTube ads (13%) and Patreon (9%), highlighting the critical role of community support in the organization's survival.
• 08:00 - 09:00: Future Plans and Conclusion The chapter discusses the significance of their shop and Patreon as primary revenue sources, emphasizing their role as science communicators. Instead of just selling merchandise, they focus on 'sciency' products that require extensive research and collaboration with experts and manufacturers. The team takes pride in being directly funded by their supporters, offering valuable products in return, in addition to their video content.

How We Make Money on YouTube with 20M Subs Transcription

• 00:00 - 00:30 In 2023 Kurzgesagt has existed for 10 years,  insanely long in internet years. We are among the   largest sciency channels on Youtube and still a  bit of a black box to people. So let us talk about   ourselves a bit in three parts: Our backstory, how  we finance our work and the values of Kurzgesagt! Let’s jump to a more innocent time. From humble beginnings to Today Kurzgesagt’s foundation was laid when Philipp, our  founder, dropped out of high school as a teenager.
• 00:30 - 01:00 Learning seemed daft and useless and he was not  interested in anything. Until a very special   teacher at a school for dropouts grabbed him  by the neck. The way she taught was different.   She talked about connections and the big picture.  She told a story. For the first time ever,   Philipp wanted to learn more without being  forced. It was a key life experience. Kurzgesagt tries to recreate this  experience for you. Nothing is   boring if you tell a good story  and we try to tell these stories,
• 01:00 - 01:30 to spark excitement and make you  want to go on and learn more. Because of the one teacher that could do  this, Philipp got a high school degree,   studied history and design and eventually  started Kurzgesagt as a passion project,   inspired by Crash Course World history. In 2012 Youtube was less commercial and more  idealistic. You couldn’t make a living with   videos as involved as ours and that was fine.  The goal was creative freedom and so for the   first few years, it actually cost money to  make Kurzgesagt. We had no outside funding,
• 01:30 - 02:00 just intrinsic motivation and a few friends from  university. We worked for clients during the day   and on Kurzgesagt at night, 80-100 hours a week.  It was a real struggle but also very rewarding. But then Patreon launched, sponsorships  started, our views increased, Youtube   changed. In 2015 the channel began to  break even and then to earn a profit.   But we were pretty burned out at this  point, so we decided to bring in more   friends and hire the first team members  full time, creating a legal entity.
• 02:00 - 02:30 More people meant that we could stop overworking,  do more and improve. But we also needed to earn   more; the livelihood of real humans depended  upon it. None of us had any experience in   running a company. We didn’t plan to become  big or to grow – it sorta just happened. A decade later Kurzgesagt is  not a small project anymore.  We are an animation studio, with offices  in Munich and Berlin. We need computers,
• 02:30 - 03:00 monitors, tablets, desks, coffee, contracts,  pay licences, taxes, rent and insurance. In 2023 our team consists of over 60 full  employees and a lot of freelancers around   the world. Salaries alone cost millions  of dollars a year, just to stay around. This creates an interesting problem:  with such high production costs,  how can we publish our work for free? How we finance Kurzgesagt
• 03:00 - 03:30 We have added up our earnings from 2015 through  2022. Our sources of funding change depending on   opportunities and the state of the world. Early  on, agency work was our main source of income,   ad revenue varies, in some years we got  more sponsorships than in others. The shop   didn’t exist for a long time, then it became  pretty big after we launched our calendar. 62% of our revenue comes  indirectly or directly from you:   You watch our videos with ads, support  us on Patreon or buy from our shop.
• 03:30 - 04:00 The single biggest source of income by far, is  our shop that alone accounted for 40% over the   last 8 years. The shop started small but once we  published our calendar for the first time in 2016,   we realised it could really help us do more  things and we started producing more and   more science products, from our posters to our  gratitude journal or universe scented candles.   YouTube ads accounted for 13% and Patreon 9%.  So without your support we would cease to exist.
• 04:00 - 04:30 Our shop and Patreon are our most important  sources of revenue, and because we see ourselves   as science communicators – we don’t just do  merch, but sciency products that we spend   hundreds of hours researching, discussing with  experts, polishing up and working on directly   with the manufacturers. They are part of the  science story we try to tell. It also just feels   good to get directly funded by you guys and give  you something back for it, on top of our videos.
• 04:30 - 05:00 YouTube ads are a crucial part of our funding  as well, but they are not within our control. Then there is paid agency work, which we  stopped doing in 2022 – it accounted for   9% of our revenue over the last 8 years. A  lot in the beginning, not much by the end. Then there are commercial sponsors  advertising products -they accounted   for 12% of our revenue. We also  got about 7% from German Public   Broadcasting for the German Channel,  but ended this partnership in 2022.
• 05:00 - 05:30 Finally there are institutional sponsors  representing about 10%. Some people take   issue with this – especially Bill Gates has come  under public scrutiny, and we’ve been criticised   for even working with organisations funded by  him. So let us look at this 10% in more detail: About 3% of our revenue over the  last eight years came from the Gates   organisations for a wide variety  of topics, often suggested by us. 5% comes from Open Philanthropy and is only  used for specific projects. With these funds,
• 05:30 - 06:00 we have started Arabic, Hindi, Korean, Japanese,  Portuguese, and French channels, bringing more   free science content to more people. Then there is  a two-year funding for original Tik Tok content,   which gives us freedom to explore and learn  how to do short form science communication. The final 2% came from other organisations  like the red cross or the UN for example. We choose institutional sponsors  carefully but if organisations   want to fund videos that help us spread  quality information about relevant topics,
• 06:00 - 06:30 this is an easy yes for us, if we have  the capacity for it. On top of that,   the institutional sponsors we are  working with align with our values. We have contracts with every grant giver or  sponsor that bars them from editorial influence,   other than suggesting topic areas like  “global health” or “climate change”.   We agree on video topics together, but  sponsors can neither influence details, nor   our conclusions. The final decision always remains  with us. And usually, we develop the topics of the
• 06:30 - 07:00 videos autonomously and tell the sponsor what  we are doing afterwards. If you are interested   in how we research our videos in detail, our  head of research wrote an article about it. Running an educational youtube channel is a  balancing act that we take very seriously. We   are doing our best to maintain this balance,  adjusting whenever necessary. As a team and   company we want to grow to give more people  access to a science based outlook on the world. This brings us to our final topic  – why are we doing Kurzgesagt?
• 07:00 - 07:30 Our Values and Our Vision Our core mission is to spark curiosity. We  want to make science and humanism accessible   for as many people as possible. The effort  we put into creating our videos is a way of   achieving that – our videos are beautiful  because that helps to spark curiosity,   to understand complex topics, and because  it just feels good to create and watch. Our research is as intensive as it is  so our videos are a good simplification
• 07:30 - 08:00 of very complicated topics. We want  to make people excited about science   so they rediscover subjects they hated  in school and see how amazing they are. On top of curiosity, we want to inspire long term  thinking and a positive, constructive outlook.   Being optimistic about the future of humanity  is not mainstream and we think this is horrible.   Pessimism often sounds smart and  gets more views while optimism can
• 08:00 - 08:30 sound naive but this is a bias that  is not helpful for us as a species.   So despite the gloominess of many topics,  we want to approach them with informed and   well researched optimism – not brushing  humanity's very real challenges aside,   but also not falling into the trap of pessimism.  We want to inspire you to dream a little about   the glorious future that we could actually  build – but only if we believe it is possible. In the long run we don’t only want to do this  on Youtube. The idea is for Kurzgesagt to be a
• 08:30 - 09:00 positive influence across more media. On our  Tik Tok channel, in the long form content we   are exploring, in apps, in the VR game that will  be released later this year and the games we plan   to make in the future. Our shop is a central part  of this vision: we start our stories with a video   and end them with a pos ter. There are so many things we want to do. And  thanks to you watching this right now, we have   the freedom to work to the best of our knowledge  and ability. In the end, we hope you like what
• 09:00 - 09:30 we offer and that we will be doing something  worthwhile for as long as we exist. And hopefully,   we’ll have a lasting impact by making science and  learning more fun for as many people as possible. If you personally want to help us do this, you can  watch and share our videos, check out our shop,   become a patreon or give us an ad blocker  exception. We exist because of you and   you have no idea how much we appreciate that  you are here. And hopefully we are less of a   black box now. In any case. Doing Kurzgesagt  for a decade has been a pretty crazy ride.
• 09:30 - 10:00 So from the whole team – Thank you so  much for being with us all these years.