Thursday, April 06, 2017

You Will No Longer Be Able to Make a Living Off of YouTube or Amazon Affiliate

Last week the content creator community of YouTube went into full sperg mode when they found out YouTube was demonetizing their videos, among other things such as throttling traffic, taking away subscribers, and other behind the scenes digital media hanky panky.  Amazon affiliates were also treated to similar news as they heard Amazon was lowering the commission they'd make from around 6% to 2-5% on various products.  But regardless of which company was doing what, the result was the same - it was increasingly harder, if not impossible, for people to make a living on YouTube or Amazon affiliate.

Naturally, taking away someone's livelihood, especially one as easy, fun, and passionate as being a YouTube celebrity or an Amazon affiliate salesman, is a huge blow.  Amazon and YouTube have served as a godsend to many people during the non-recovery from the Great Recession, not to mention provided some much-needed income to impoverished Millennials battled their way out of worthless-degree student loan debt.  But as bad news as this is for the thousands, likely, millions of people who derive some kind of income from this new economy, there's some vital economic lessons to learn from this "YouTube/Amazon" bubble bursting.  Because if you don't learn these vital economic lessons, you're life is going to be infinitely worse going forward.

First, understand the days of making a living on YouTube or Amazon's affiliate program was a bubble.  Just like the Bakken oil field, just like the gold rush of 1849, just like the Dotcom bubble, there was the boom and then the bust.  The good days are OVER.  You may not like this fact, but it's reality.  This new digital economy is not immune to the natural forces and laws of economics that all of human history has been subjected to, so you must come to grips with reality and accept this.

Closely related, second, stop being a teacher or government worker.  A disproportionate number of YouTube content creators and Amazon affiliates are younger people, either inexperienced or ignorant about the real working world.  And because they were brought up under a K-college environment where everything "should" be a certain way, they have delusional expectations that YouTube and Amazon would/should be providing this income opportunity for them forever.

You know who else thinks that delusionally?

Teachers and government workers.

Hailing from the private sector where the economy is allowed to evolve, advance, and jettison obsoleted parts of itself, I'm always amazed at how government workers, especially teachers, think they're entitled to life long employment.  Like a toll worker on Chicago's interstate system, they think they're entitled to hold up the rest of society just so they can keep a job.  And whereas there are some arguments for civil service jobs to be somewhat permanent because of their different nature to private sector jobs, YOUTUBE CONTENT CREATION AND AMAZON AFFILIATES ARE NOT THE PUBLIC SECTOR.

Amazon, and especially YouTube, are responding to changes in the economy so that they may (in YouTube's case) remain profitable and thus in business.  Matter of fact, if you bothered to look at their income statements (they are available) both YouTube and Amazon operate on negative/razor thin margins.  In other words, this current business model was not sustainable.  And while I know your diversity studies professor, who has no real world working experience, may blame this on "the evil privileged white male corporations maaaan" the reality is you should be happy you had the chance to make money when you did.

Third, Amazon and YouTube are monopolies.  And if you paid attention in your economics 101 class (while again, your professor who had no real world experience, probably told you how things "should" be and you're all entitled to free everything), you would know that, like it or not, the world is the monopolies' bitch.

Don't like the fact oil prices are going up?  Too bad, talk to the OPEC monopoly.
Don't like the fact MS Office costs $300?  Too bad, talk to Microsoft.
Don't like the fact YouTube is the critical mass source of videos?  Too bad, go to Dailymotion.

In other words, since YouTube and Amazon are monopolies they can literally do whatever they want because you have no other option.  The real issue is whether you're going to accept this and realize it.

You can protest, argue, write letters, and make all the videos in the world, but none of that changes the fact YouTube and Amazon have all the power in this relationship.  And if you don't realize that, you're going to waste more time trying to change the inevitable, which is wasting precious time, energy, and resources you don't have.  This leads to...

Fourth, did you monetize your site?  Did you build a business or some kind of independent revenue stream from this success?  Heck, did you save your money during these 7 years of feast in preparation for the 7 years of famine?  I've detailed this in a video I did before about how you can sell ads directly on your own channel without YouTube's permission.  I also built up an independent empire called "Asshole Consulting" where I merely use YouTube as a tool to consult, not as a means to make ad revenue, meaning I don't care if my videos get demonetized.  The larger point is I came up with a Plan B, diversified and leveraged what modicum of YouTube micro-internet celebrityship I had into alternative revenue sources, and more or less inoculated myself against the monopolistic whims of these two companies.

But let's be perfectly honest.  Do the majority of these new internet income makers have this level of entrepreneurial hustle and business acumen?  Most, though not all, of these people fell into this.  They stumbled upon this digital gold either finding out they had a voice that was popular among social media or just had a knack for making content.  And much like Bakken oilfield workers pissed away their money on $70,000 Dodge heavy duty diesel trucks, these new digital boom town workers did the same.  Johnathan McIntosh, known most primarily for being Anita Sarkeesian's boyfriend, has twice the internet following I do, but apparently can't find a job... but still desperately holds onto the hope he'll make money doing videos.  The Amazing Atheist, who at least diversified into a successful $10k per month Patreon e-begging racket and A MILLION FOLLOWERS, is freaking out.  If there's any bit of proof that this was a classical bubble and people's success was accidental, it would be the sheer number of leftists who made serious capitalistic bank on this bubble while not being the slightest bit hip or couth to free market economics. 

The larger lesson is now that the good times are over, how are you going to react to it?  Are you going to accept it, live in reality, and move on?  Are you going to accept your YouTube girlfriend dumped you and wants nothing to do with you any more?  Are you going to acknowledge and realize fighting against this is stupid, pointless and futile?  AND are you going to learn your lesson for the next time there's another Amazon, Bakken, gold rush, or Dotcom boom and save your money?

This is the first real world test for a lot of Millennials who had a (great and fun) first time experience romping around with real world economics.  You may have squandered your opportunity this time around, but learning from it will ensure you capitalize on the next opportunity....if one ever presents itself...because let's be honest, these bubbles are once in a life time opportunities.

Enjoy the decline!
Visit Aaron's other sites where you may bask in his Super Awesome Economic Genius (TM)!
Asshole Consulting
Amazon Affiliate


Anonymous said...

Yes. Yes. Yes. Economy and life -don't forget plain and simple life- are always changing. Somethings you see coming -like Amazon/You Tube-others you don't. Isn't it amazing how lazy people are? Why don't they look and think ahead or at least quietly accept they weren't aware? It's beyond me. But then, I'm a minimalist, I don't care. It's all well as long as I can get by and still put a little something aside while eying options for the future. ...did I mention? This is another good post of yours.

Vader999 said...

The problem is, these people don't understand that this whole thing hinges on a market economy. Look at the people with money. Look for something they want, but something they can't get with what they currently have. Find a way to offer it to them in exchange for their money. It's like this: Country A has gold and silver in droves, but they can't grow crops as well as other countries, and they sorely want things like quality potatoes. Country B has the land that can furnish those potatoes, but they don't have as much gold as Country A does. They take the land, farm the potatoes, and sell them to Country A for the gold and silver. That's how things work.

These people don't understand that just hoping for mana to fall from the sky isn't gonna work. You'll have to get God's attention first before He starts raining bread down on your head, and one way to do it is to offer Him something that most human beings don't give to Him. That's how you get the attention of God or any other sapient being-to stand out in a beneficial way to offer them something that they don't already have a surplus of.

tpkeefe said...

Excellent points here are:

1. The platforms are monopolies. Unless there's competition in the space, you'll have to deal with this. I wasn't even aware that YouTube was monetizing videos some years back because I used YT as a means of entertainment and, increasingly, education -- particularly about the Manosphere, SJWs, etc.

2. What you did, Aaron, was, I believe, what should have been the case with YT all along -- as a means of advertising and direction to another service. Nothing more. You point potential customers to the service, instead of YT videos being the service.

Faithless Cynic said...

Spot on my Captain, I had a banking job which paid $55K per year in 2000. The pay was screamingly out of proportion to what the same job paid in other banks in Delaware. A co-worker and I decided the job would not last. I bought 2 rental homes and he bought a vending machine business. Seven years later, the company was bought by FDR and our jobs were shipped to Omaha. I got another banking job paying about half of my former salary. We did OK due to income from the rentals. I was fired from the banking job and never went back. I fucking HATED banking with the idiot rules and procedures which were customer hostile. I simply hit the wall and could not work in banking any longer.

So, where am I today? Sold one rental house and paid off my home mortgage ( Remember, food, water, shelter - everything else is gravy) One remaining rental is paid off, the other will be soon. I have a basic job in manufacturing which provides income and healthcare.

My biggest mistake? I did not make extra principle payments on the rental mortgages when I had a high salary. Your comment about buying a $70K truck during good times was priceless. My second biggest mistake was taking a lot of abuse from bad tenants because I needed the money. I got rid of the assholes the moment the rental mortgage was paid off. I should have dumped them years earlier.

Anonymous said...

Thanks for the informative writeup Captain. I will shelve for now my youtube/amazon prostate supplement venture.

Anonymous said...

A lot of that ad money will be go to other channels. Those channels that don't talk about religion/politics will bank even more.

Jim Scrummy said...

Yep, especially Amazon is a bubble. At best Amazon and Youtube are nice to have minor revenue streams, but, having other revenue streams also helps (ala Cappy). I have a friend who has become a serial entrepreneur over the past 30 years. His mantra is to have 3-4 income revenue streams, hence he currently owns 3 companies outright and is in a partnership in a 4th company. He had a "near" death business experience and learned from it quickly, and diversified from one revenue stream to three. What he did is called hustle and hard work.

Mr Cool said...

I am a independent seller on Amazon but I could see the hand writing on the wall so to speak I knew that eventually as we got nearer a recession things like this would change so I started my own eCommerce website last year. Didn't want to trust things I do not own or control for my income. My eCommerce is now bigger than my Amazon income so I have opened a second Ecom site. When I started selling on Amazon you could ship your products to Amazon's warehouse and they would fulfill orders for a fee but there was no storage fees, but that changed about 2 years ago, and Amazon started competing directly with there independent sellers so off to Ecom land I had to go. I will still sell on Amazon until that gravy train runs out. Most of these type of changes people who could not see it coming will bitch, but I say "Thank You Amazon For Showing Me The Errors Of My Ways!"