WEBVTT

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uh how does LMG make money too lttstore.com

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it doesn't take a deep thinker to figure out that we spend a lot of money around

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here on staff our facility filming sets production equipment computers etc etc

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etc what's tougher is where it all comes

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from i've seen speculation that we're involved in everything from i.t

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consulting to commercial film production to back alley deals with industry giants

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to suppress their competition all of which is pretty funny to me because i

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know that at least two million of you already got the answer to this question

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we only make youtube videos

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or at least back then we did in fairness to you guys

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the last four years has seen a lot of change in the influencer industry as a

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whole and our company has also changed

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we've nearly tripled in size by our head count

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so i guess i felt like in the interest of maintaining the kind of transparency

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with our community that y'all expect from us it was time for

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an update and this video is sponsored by shopify

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a lot of what i'm about to tell you is going to be the same as last time

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starting with how we keep money from polluting our editorial content

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so we still maintain strict guidelines for our sponsor's behavior even going as

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far as to issue ultimatums for poor business practices like for example

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making it difficult to cancel recurring payments or even cutting them off

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outright for poor customer service and every brand from small indie shops who

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couldn't pass money if they wanted to all the way up to large multinationals

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with quarterly or even annual spending commitments with us gets the same

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treatment when it comes to product reviews you cannot buy a positive review

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at Linus tech tips and in fact you can't buy a review at all our editorial

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calendar is not for sale even if you sponsor a product showcase or some other

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similar demonstration of your product which by the way is never the same as a

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review on our channel or anyone else's in accordance with ftc guidelines we

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won't give any opinion we can't stand behind and we would rather scrap the

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video and leave the money on the table rather than compromise the trust of our

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audience we've done it why you might ask well mostly because we're just

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nice people and we care about both the work that we do and how it affects you

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but even if you don't believe that and you'd rather believe that we're an evil

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corporation that's only out to make money i've got that covered too

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our most stalwart fans the ones that buy merch from lttstore.com

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support us on flowplane where we upload early access and exclusive videos and

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buy products using the paid links under our videos directly contribute a massive

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32 percent of our annual revenue as a company and the most mind-bending thing

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about that number is that my most generous estimate puts that group of

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people at roughly a hundred thousand less than one percent of our subscribed

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viewers on the main channel that makes you the the one percent a more powerful

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block than any corporate overlord or sponsor could ever be which is both

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really cool and also

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a little humbling so if you're taking a sip of water from

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our water bottle or watching this on Floatplane then from the bottom of my

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heart and everyone here thank you

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you guys make a way bigger difference to us than you probably realize out of that

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32 the smaller portion of affiliate revenue

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here is mostly newegg and walmart with amazon associates making up the rest now

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amazon is still a pretty big chunk of change but since 2016 it's fallen from

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16 of our overall income to just nine

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percent and honestly speaking a big part of the reason for this is that we're

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actually afraid of calling out the links in our videos for fear that we're gonna

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get kicked out of the program again for like doing it wrong even though it's a

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way that other people do it so we just

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chucked the links down there in the video description and hope that people find them on their own i mean

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how crazy is that an affiliate program with rules that are so opaque and

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enforcement that's so random that participants are afraid to promote it uh

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flow plane is also significantly down compared to vessel the early access

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startup company that we used to publish our videos early on but that's less of a

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scary bad thing than you might think unlike vessel which as far as we could

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tell was basically just flushing venture capitalist money into the pockets of

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online creators Floatplane is a sustainable alternative revenue source

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for us it's also a bigger chunk than it looks like because it's almost all content

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that we would have produced anyway so there's next to no extra expense to

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produce it and unlike physical goods you don't need to buy it ahead of time and

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stock it in a warehouse before you can profit off of it bringing us perfectly

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to our biggest gainer overall merch has grown a massive five times from three

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percent all the way to fifteen percent so if you found yourself wondering why

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is he always like ltteststore.com well there's your answer the big

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difference maker here was abandoning the turnkey solutions that we tried before

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like teespring in favor of an approach that allows us to maintain strict

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control over both our storefront through shopify did i mention they're the

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sponsor of this video thanks bros and product quality so now we source our own

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blank shirts we design our own artwork and we work with a local printer here in

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vancouver to make our own t-shirts while also maintaining our own relationships

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with overseas factories for other products like underwear water bottles

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cable ties etc shopify also has lots of

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tools that have helped us grow this segment like deep integration with

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third-party add-ons analytics that help us understand where our traffic is

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coming from and how well we're converting and much much more of course

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we've seen growth in other areas too in 2016 we were doing about 400 million

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views a year company-wide this year we're tracking over a billion views on

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the Linus tech tips channel alone and at that kind of scale even a fraction of a

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cent per view adds up to some pretty crazy numbers more than i expected

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actually i mean obviously as ceo of the company i look at our books from time to

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time but this kind of analytical reporting needs

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to be generated manually so i've been going on gut feeling all this time

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thinking that we've become less dependent on google compared to four

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years ago when actually it's more now

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youtube takes a lot of flack and often rightfully so for their management of

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the platform and its creators but let's give the team some credit here between

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tools that contribute directly to our bottom line like memberships and super

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chats and more indirect ones like youtube premium which for those

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wondering contributes way more to the channels that you watch

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than ads our RPM or revenue per thousand

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views has gone up a shocking 44

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even though cpm's or how much an advertiser paid per thousand views have

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actually fallen by nearly 20 percent in that time another way we've grown is

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through direct sales at 42 percent of our total revenue in 2020 compared to 51

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in 2016 they've technically dropped down a fair

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bit but in fairness those guys have a lot on their plate and one of the ways

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that they've stepped up is by greatly diversifying the types of sponsors that

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we deal with we've gone from pc hardware vendors so

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these are brands whose products we could conceivably also cover editorially

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making up 85 of our sponsor dollars to

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just 26 so far this year this has been one of my goals for as long as we've

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existed as a company because not only does it diversify our revenue streams

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which is like business 101 it also reduces the potential for conflicts of

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interest the way that we sit right now our

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independence as a media outlet can never be compromised by say you know some

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whale corporate sponsor who might try to pressure us into providing favorable

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coverage by threatening to withhold funding that we need to survive it

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cannot happen breaking these numbers down a bit we

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obviously do a lot less live event coverage now thanks kovid and fully

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sponsored videos have actually dropped off as a share of total revenue but

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we've pretty much made up for it with those regular mentions that you guys see

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at the beginning and end of LTT videos and with mentions on channels that

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simply didn't exist before like TechLinked our thrice weekly tech news

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roundup and ShortCircuit our back to basics unboxing and first impressions

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channel that features many different hosts from the team here so let's throw

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up a summary chart here yep all right so there it is other is

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some reimbursements and crap and then our minecraft server is also in there

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for a whopping zero percent although i'm actually expecting that to be an area of

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growth as Jake and the team roll out new features by the way you can check that out at the link down below and then i

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think everything else on here i have addressed already so

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that's the big picture that's how the sausage is made

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leaving only one thing then the title of this video

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some of you are probably going to be a little annoyed to hear this but i'm not

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going to address it directly but hold on hold on i actually

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have a few good reasons for that one while i could tell you the salary

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that i take home to actually live on day to day that would be

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pretty meaningless given that the company is owned entirely by me and my

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immediate family so that would just that would be not lying but definitely

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misrepresenting reason number two

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i could instead cite my annual increase in net worth except that the problem is

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it would be really easy for people to misinterpret that

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like let's say for example the value of the Linus tech tips youtube channel goes

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up year over year by some big number let's say a million dollars compared to

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last year that makes it sound like i made a

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million dollars but it's also a number that i'm completely

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pulling out of thin air unless i have an actual buyer for the channel which i

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don't and to realize that gain i would actually have to sell the channel which

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i have no intention of doing making the entire discussion purely academic

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finally reason number three it's none of your beeswax

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the good news is that i've given you an absolute wealth of data here pun

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intended including some numbers that can fairly easily be tracked back to known

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values so if you care that much and you've got the

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requisite background knowledge you could at least try to make an educated guess

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at it i'm not going to confirm or deny any such theory crafting see reason

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number three but what i will say is that i've seen at least one past attempt that

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was pretty close and also a lot that were completely out

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to lunch speaking of lunch you should pack your beverage

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in an insulated water bottle from ltteststore.com powered by shopify

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big shout out to our canadian bros over there for sponsoring this video

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not that there was no ulterior motive behind it shopify loves drawing

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attention to online businesses both small and large that use their platform

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to grow their business online and at 500

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growth in the last few years actually almost all of which was in the last two

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we are definitely one of those if you want to create an online store front

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that looks great and has tons of features shopify has got you covered

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check them out at the link in the video description if you want to see an example of a great shopify store that

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you might also enjoy you know buying some products from

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just visit lttstore.com there's like so many layers of

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sponsorception in this video

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and that is how LMG makes money