uh how does LMG make money too lttstore.com
it doesn't take a deep thinker to figure out that we spend a lot of money around
here on staff our facility filming sets production equipment computers etc etc
etc what's tougher is where it all comes
from i've seen speculation that we're involved in everything from i.t
consulting to commercial film production to back alley deals with industry giants
to suppress their competition all of which is pretty funny to me because i
know that at least two million of you already got the answer to this question
we only make youtube videos
or at least back then we did in fairness to you guys
the last four years has seen a lot of change in the influencer industry as a
whole and our company has also changed
we've nearly tripled in size by our head count
so i guess i felt like in the interest of maintaining the kind of transparency
with our community that y'all expect from us it was time for
an update and this video is sponsored by shopify
a lot of what i'm about to tell you is going to be the same as last time
starting with how we keep money from polluting our editorial content
so we still maintain strict guidelines for our sponsor's behavior even going as
far as to issue ultimatums for poor business practices like for example
making it difficult to cancel recurring payments or even cutting them off
outright for poor customer service and every brand from small indie shops who
couldn't pass money if they wanted to all the way up to large multinationals
with quarterly or even annual spending commitments with us gets the same
treatment when it comes to product reviews you cannot buy a positive review
at Linus tech tips and in fact you can't buy a review at all our editorial
calendar is not for sale even if you sponsor a product showcase or some other
similar demonstration of your product which by the way is never the same as a
review on our channel or anyone else's in accordance with ftc guidelines we
won't give any opinion we can't stand behind and we would rather scrap the
video and leave the money on the table rather than compromise the trust of our
audience we've done it why you might ask well mostly because we're just
nice people and we care about both the work that we do and how it affects you
but even if you don't believe that and you'd rather believe that we're an evil
corporation that's only out to make money i've got that covered too
our most stalwart fans the ones that buy merch from lttstore.com
support us on flowplane where we upload early access and exclusive videos and
buy products using the paid links under our videos directly contribute a massive
32 percent of our annual revenue as a company and the most mind-bending thing
about that number is that my most generous estimate puts that group of
people at roughly a hundred thousand less than one percent of our subscribed
viewers on the main channel that makes you the the one percent a more powerful
block than any corporate overlord or sponsor could ever be which is both
really cool and also
a little humbling so if you're taking a sip of water from
our water bottle or watching this on Floatplane then from the bottom of my
heart and everyone here thank you
you guys make a way bigger difference to us than you probably realize out of that
32 the smaller portion of affiliate revenue
here is mostly newegg and walmart with amazon associates making up the rest now
amazon is still a pretty big chunk of change but since 2016 it's fallen from
16 of our overall income to just nine
percent and honestly speaking a big part of the reason for this is that we're
actually afraid of calling out the links in our videos for fear that we're gonna
get kicked out of the program again for like doing it wrong even though it's a
way that other people do it so we just
chucked the links down there in the video description and hope that people find them on their own i mean
how crazy is that an affiliate program with rules that are so opaque and
enforcement that's so random that participants are afraid to promote it uh
flow plane is also significantly down compared to vessel the early access
startup company that we used to publish our videos early on but that's less of a
scary bad thing than you might think unlike vessel which as far as we could
tell was basically just flushing venture capitalist money into the pockets of
online creators Floatplane is a sustainable alternative revenue source
for us it's also a bigger chunk than it looks like because it's almost all content
that we would have produced anyway so there's next to no extra expense to
produce it and unlike physical goods you don't need to buy it ahead of time and
stock it in a warehouse before you can profit off of it bringing us perfectly
to our biggest gainer overall merch has grown a massive five times from three
percent all the way to fifteen percent so if you found yourself wondering why
is he always like ltteststore.com well there's your answer the big
difference maker here was abandoning the turnkey solutions that we tried before
like teespring in favor of an approach that allows us to maintain strict
control over both our storefront through shopify did i mention they're the
sponsor of this video thanks bros and product quality so now we source our own
blank shirts we design our own artwork and we work with a local printer here in
vancouver to make our own t-shirts while also maintaining our own relationships
with overseas factories for other products like underwear water bottles
cable ties etc shopify also has lots of
tools that have helped us grow this segment like deep integration with
third-party add-ons analytics that help us understand where our traffic is
coming from and how well we're converting and much much more of course
we've seen growth in other areas too in 2016 we were doing about 400 million
views a year company-wide this year we're tracking over a billion views on
the Linus tech tips channel alone and at that kind of scale even a fraction of a
cent per view adds up to some pretty crazy numbers more than i expected
actually i mean obviously as ceo of the company i look at our books from time to
time but this kind of analytical reporting needs
to be generated manually so i've been going on gut feeling all this time
thinking that we've become less dependent on google compared to four
years ago when actually it's more now
youtube takes a lot of flack and often rightfully so for their management of
the platform and its creators but let's give the team some credit here between
tools that contribute directly to our bottom line like memberships and super
chats and more indirect ones like youtube premium which for those
wondering contributes way more to the channels that you watch
than ads our RPM or revenue per thousand
views has gone up a shocking 44
even though cpm's or how much an advertiser paid per thousand views have
actually fallen by nearly 20 percent in that time another way we've grown is
through direct sales at 42 percent of our total revenue in 2020 compared to 51
in 2016 they've technically dropped down a fair
bit but in fairness those guys have a lot on their plate and one of the ways
that they've stepped up is by greatly diversifying the types of sponsors that
we deal with we've gone from pc hardware vendors so
these are brands whose products we could conceivably also cover editorially
making up 85 of our sponsor dollars to
just 26 so far this year this has been one of my goals for as long as we've
existed as a company because not only does it diversify our revenue streams
which is like business 101 it also reduces the potential for conflicts of
interest the way that we sit right now our
independence as a media outlet can never be compromised by say you know some
whale corporate sponsor who might try to pressure us into providing favorable
coverage by threatening to withhold funding that we need to survive it
cannot happen breaking these numbers down a bit we
obviously do a lot less live event coverage now thanks kovid and fully
sponsored videos have actually dropped off as a share of total revenue but
we've pretty much made up for it with those regular mentions that you guys see
at the beginning and end of LTT videos and with mentions on channels that
simply didn't exist before like TechLinked our thrice weekly tech news
roundup and ShortCircuit our back to basics unboxing and first impressions
channel that features many different hosts from the team here so let's throw
up a summary chart here yep all right so there it is other is
some reimbursements and crap and then our minecraft server is also in there
for a whopping zero percent although i'm actually expecting that to be an area of
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
think everything else on here i have addressed already so
that's the big picture that's how the sausage is made
leaving only one thing then the title of this video
some of you are probably going to be a little annoyed to hear this but i'm not
going to address it directly but hold on hold on i actually
have a few good reasons for that one while i could tell you the salary
that i take home to actually live on day to day that would be
pretty meaningless given that the company is owned entirely by me and my
immediate family so that would just that would be not lying but definitely
misrepresenting reason number two
i could instead cite my annual increase in net worth except that the problem is
it would be really easy for people to misinterpret that
like let's say for example the value of the Linus tech tips youtube channel goes
up year over year by some big number let's say a million dollars compared to
last year that makes it sound like i made a
million dollars but it's also a number that i'm completely
pulling out of thin air unless i have an actual buyer for the channel which i
don't and to realize that gain i would actually have to sell the channel which
i have no intention of doing making the entire discussion purely academic
finally reason number three it's none of your beeswax
the good news is that i've given you an absolute wealth of data here pun
intended including some numbers that can fairly easily be tracked back to known
values so if you care that much and you've got the
requisite background knowledge you could at least try to make an educated guess
at it i'm not going to confirm or deny any such theory crafting see reason
number three but what i will say is that i've seen at least one past attempt that
was pretty close and also a lot that were completely out
to lunch speaking of lunch you should pack your beverage
in an insulated water bottle from ltteststore.com powered by shopify
big shout out to our canadian bros over there for sponsoring this video
not that there was no ulterior motive behind it shopify loves drawing
attention to online businesses both small and large that use their platform
to grow their business online and at 500
growth in the last few years actually almost all of which was in the last two
we are definitely one of those if you want to create an online store front
that looks great and has tons of features shopify has got you covered
check them out at the link in the video description if you want to see an example of a great shopify store that
you might also enjoy you know buying some products from
just visit lttstore.com there's like so many layers of
sponsorception in this video
and that is how LMG makes money