How does LMG make money? - Honest Answers Episode 2
Linus Tech Tips
·Linus Tech Tips
·2017-05-06
·
1,656 words · ~8 min read
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Welcome to episode two of honest answers. Today I'm going to try to
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demystify another aspect of the inner workings of Lionus Media Group about
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which there appears to be a lot of confusion. How do we make enough money
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to afford all the staff, studio space,
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and equipment that we have?
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Tunnel Bear is the simple VPN app that makes it easy to browse privately and
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enjoy a more open internet experience. To try Tunnel Bear for free, check out
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the link in the video description below. So, it feels appropriate to open
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this discussion with one of the main ways that people think we make money,
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paid advertising videos disguised as reviews. While we actually couldn't be
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fined for that type of behavior here in Canada where the advertising guidelines
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and even then they are guidelines not laws here are only just now being
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revised for the age of social and influencer marketing for brands and
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agencies that want to market to Americans. So 40 to 50% of our audience
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hefty fines are quickly becoming commonplace with undisclosed influencer
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marketing. So no responsible brand would
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engage in this practice and we outright refuse to as well anyway because even
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with proper disclosure, what value does a paid review or even a video with a
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very similar structure to a review have to the
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viewer? Which getting into how we do make money then doesn't mean that we
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never do paid projects with hardware manufacturers. We absolutely do. Every
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entry in the obscenely popular build guide series is clearly sponsored by
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either Intel or by AMD. But in these and
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other product placement deals, we retain the right for our hosts and writers to
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have their own opinions with very tight restrictions on what a brand can alter
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about the finished video. We grant these sponsors no special rights to positive
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reviews in other videos or even space on
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our editorial calendar at all. For example, perennial sponsors Corsair and
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Cooler Master often promote products in pre-roll ads that we have never reviewed
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and a Pacer is an example of a sponsor whose products we have never reviewed at
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all. There's other baggage for LMG sponsors too. We have on multiple
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occasions canned potential sponsors for refusing our terms and even existing
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sponsors for not taking care of our viewers. Dbrand is a golden example of
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what we expect in this regard. If an LTT
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community member complains, they mobilize the robot army immediately and
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do what it takes to fix it. This is critically important for us because as
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I'm about to reveal in enough detail to make Nick and Ivon
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wse, no amount of marketing funding in
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the short term could possibly outweigh the long-term value of creating the best
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content we can while maintaining the trust and viewership of our audience.
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I'm not going to give exact numbers here. Firstly, because disclosing dollar
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amounts would violate some of our contractual agreements. And secondly,
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because exactly how much money I or Luke or Brandon or anyone else here makes is
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none of your business. But however much it is, here is where it comes from. A
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little under half of Lionus Media Group's revenue this year has come from
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sources that are basically directly affected by the number of views that we
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draw in. YouTube AdSense, you know, that little skip ad button you clicked before
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watching this. And Amazon affiliate links, that shout out at the end of our
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videos where you can buy the product that I'm reviewing or really anything
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else and we get a kickback, make up equal portions of this. And Vessel, the
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early access platform where you can watch our videos 7 days before they go
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live on YouTube, makes up a smaller but still very significant chunk. Of the
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remaining 50% in change, a quarter of that is the brands who sponsor us to
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cover events like Computex, the Samsung Developer Conference, NAB, the Polaris
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launch in Macau, and PAX East. Another
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quarter of it is pre-roll ads and what we call standard product integrations.
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You know how the Mastercase 5 has a variety of modular parts and MasterUp
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gets you great deals on genuine products over at drawups/ etc, etc. and we bake
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those into our Linus Tech Tips videos on YouTube. Techquiki and WAN Show ad spots
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get separated out in our books. So, I'll do the same for you. They combine for
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just under 15%. Then another 5% is
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t-shirt fan and hoodie sales. Another 2% is patrons and contributors and banner
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ads on the forum and.1% is one sponsored spot that we did
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over on channel Super Fund for ODS games. Man, that channel loses a lot of
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money. Anyway though, the remainder, so
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just about a third of it, is the dozen or so projects that we've done this year
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that fall outside of standard pre-rolls
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and integrations. Some of them are dedicated, disclosed, fully sponsored
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videos, like the recent tech then versus now video sponsored by Sage. Uh the my
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grandpa meets Google video sponsored by the Google store and the unbuild logs
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that we've done with some system integrators including I by Power and
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Origin PC. But many of them are things that probably wouldn't even occur to
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you. On the books for this year, we've got the sponsored Instagram posts,
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tweets, and Periscope streams that we did from the North America and New York
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auto shows with Ford and Toyota. We've got a series of retail staff training
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videos that we produce exclusively for Intel's Retail Edge program. We've got
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Dbrand's product placement and sponsorship of Scrapyard War season 4.
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Logitech's Daniel Boral Innovation Center tour and Nerd Sports, a series
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that Vessel contracted us to produce as an exclusive web series for their
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platform. With that being pretty much
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it. So then, why am I telling you all of this? Most YouTubers keep this stuff
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very carefully hidden. The answer is because I believe you guys have a right
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to know. And because I hope that it'll drive home once and for all why it's in
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our best interest from both an ethical and even a monetary standpoint to make
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the best content we can make. Whether that means working with long-term
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partners, products from non-sponsors, or
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even brands who can't be asked to reply to an email about a review unit. And I
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do all of this hoping, even though I realize that no degree of transparency
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will convince some of you, hoping that I can get across the point that we aren't
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in fact actually paid NVIDIA shills. Nor
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are we obligated to bow to any other manufacturer.
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All of these hardware vendors, the ones on this list and any miscellaneous
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smaller ones I might have missed, combined make up less than 15% of our
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revenue so far this year. If that business went away tomorrow, Linus Media
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Group would not only survive, but it would continue operating the way it does
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without needing to cut anyone's pay or downsize our workspace. And this is
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thanks to the partnerships we've built with non-h hardware brands who want to
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reach our audience like Squarespace, Dollar Shave Club, Ting, Soilent, Gamma
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Labs, VideoBlocks, Blue Apron, Tunnel Bear, and more. And more importantly,
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thanks to you guys. You, the audience, are in black and white terms in every
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measurable way worth more to us than
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anything that a sponsor can offer. And I hope that you can understand why that
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is. Now, to be clear, undisclosed paid
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reviews are out there. I'm not saying to put away your tin foil hats just yet.
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Some key ways to recognize them would be manufacturer links, especially tracked
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or custom ones, in the video description with above the fold being a dead
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giveaway or supporting social posts with weird hashtags that no one in their
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right mind would give a [ __ ] about. But I'm just saying that thanks to self
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flattery incoming careful planning on my part and my teams, you won't find them
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purchase. So, thanks for watching, guys. If this
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