Yes, You Can Make Six Figures As A YouTube Star ... And Still End Up Poor

It's the new American Dream: Quitting your job to become famous on YouTube.

Dozens, possibly hundreds of people, have built up huge audiences on Google's video upload site, and the media is full of stories of their success. The archetype is Jenna Marbles, who has millions of fans and makes an estimated $350,000 a year from her self-deprecating takes on life as an American female.

But before you buy a videocamera and tell your boss to shove it, consider what it costs to become a YouTube star. Turns out you can be one of the most famous people on the web and still barely get by.

The New York Times recently profiled Olga Kay, another YouTube star who does self-deprecating monologues on female American life (are you sensing a theme here?). It's a great story if you want some hard numbers on the costs and revenues of being internet famous:

• Kay has earned $100,000 to $300,000 in each of the last three years. She has 1 million subscribers. That number is merely the gross revenue, however.
• She makes 20 videos a week, all of which are filled with ads via Google's automated YouTube partners program.
• Kay likely gets about $7.60 per 1,000 ad views, down from $9.35 in 2012, according to TubeMogul, which buys and sells video ads.
• Ads are only run on a minority of videos show. Roughly, a video creator will earn $2,000 for every million views. "And then YouTube takes 45 percent," the Times notes. (The IRS will take its cut of the remainder, too.)
• Kay spends $500-$700 a week on editing costs.

In other words, Kay is probably getting by on less than 50% of what her videos make in gross revenue. In a $100,000 year, she might be looking at $15,000 annually, after YouTube's cut, taxes and editing costs, according to our back-of the-envelope math ($100,000 minus $45,000 for YouTube, minus 30% for the IRS, minus editing costs at $500 per week for 50 weeks).

We presume Kay's real numbers are a little more optimistic than that - otherwise why bother?

Jason Calacanis, a well-known Silicon Valley entrepreneur who was part of YouTube's professional partners program, said that to make 10 videos he would spend $25,000 to $75,000 in costs before a dime was earned in advertising:

We were huge fans of YouTube ... but we are not creating content anymore because it's simply not sustainable. YouTube is an awesome place to build a brand, but it is a horrible place to build a business.

Here's Olga Kay's channel.