YouTube is the ‘ultimate’ modern day MLM

That’s right, I went there.

Multilevel marketing (MLM) is a strategy that some direct sales companies use to encourage existing distributors to recruit new distributors. In MLM schemes, there can be hundreds or thousands of members worldwide (or in the case of YouTube, Instagram and the likes, millions upon millions), but relatively few earn meaningful incomes from their efforts, indicating a possible pyramid scheme. Multilevel marketing is also referred to as ‘referral marketing’.

The entire premise of multilevel marketing is that people make sales for a company without being actual employees of that company. The ‘consultants’ make a small commission for their work and those higher up at the company will always be the one’s making real money. While companies like LulaRoe, Amway, Mary Kay Cosmetics and Avon might be struggling in a pandemic-ridden 2020 due to the structure and nature of their corporate pyramid, YouTube has been reaping the rewards of their corporate pyramid one-hundred-fold over the past decade.

Before you roll your eyes, hear me out!

Content creators are not employees of YouTube. They’re consultants. They don’t get benefits. They don’t have taxes taken off of the money YouTube pays them. They don’t earn a regular income. They’re paid based on performance. And, if they so like, they can take some of that payment from YouTube and put it directly into the membership costs of belonging to a YouTube network that promises to help them grow their platform. Furthermore, YouTube relies on content creators to bring in new creators and grow the YouTube platform further and bring in more money. In the case of YouTube, content creators are selling advertisements.

Now, let’s compare YouTube to Mary Kay Cosmetics, a widely known MLM. Mary Kay Cosmetics does not hire employees, they instead opt for a company structure that sees consultants making sales for the business, and, bringing in new consultants. Consultants are not paid a regular income, instead they earn based on performance. The more they sell, the more they earn. Mary Kay Cosmetics consultants also have the option to take their earnings and put it towards a network that will allow them to grow their platforms, and (hopefully) in turn sell more makeup.

Sounds familiar, right?

YouTube operates monetization on a sliding scale. Content creators are required to meet certain thresholds with their channel in order to even become monetized in the first place. As an audience grows for a particular content creator, new opportunities open up for them on the platform, such as being able to live-stream, finally earning a portion of the adsense dollars that YouTube is already making from their videos, and eventually even being able to open up their own ‘Membership structure’ for their channel in which people can pay the content creator directly for things like shout outs or sneak peaks. The better you perform, the more chance you have to earn. But also, if you don’t perform at all, it does not hurt the company whatsoever.

Mary Kay also operates their pay structure on a sliding scale. Sales consultants are required to make an initial investment in the company and sell ‘x’ amount of dollars worth of product before they’re able to even earn a profit. Depending on the amount an individual is able to sell, Mary Kay opens the opportunity for said sales consultants to earn bonuses – these can be anything from extra commission to free trips to the chance to drive a pink, branded car. The better that you perform, the more chance that you have to earn. But also, if you don’t perform at all, it does not hurt the company whatsoever.

In both cases, networking is pretty key to finding any sort of moderate success.

Now, wait a minute, wait a minute. The initial investment into a company like Mary Kay Cosmetics is one that you pay directly to the company. What is the initial investment in YouTube?

I’m glad that you asked.

While the initial investment one must make to begin a YouTube channel is not paid directly to the platform itself, you are required to have some form of technology – be it a phone, camera or computer – that allows you to film, edit and post videos to the platform. No, you don’t buy those phones, cameras or computers directly from YouTube. But, what you do give YouTube is your time. And time is valuable. For reference, when you’re just getting started with video editing, it can take as much as thirty hours to edit a single ten minute video. For someone like myself, last year I worked for an economic development firm part-time. The hours weren’t regular, but when I was working, I was earning $20 an hour. If I spent 30 hours on a project, I would earn $600. For a new content creator on YouTube, until they reach 4,000 hours of watch time, 1,000 subscribers or more and compliance with YouTube’s community guidelines, they’re not earning a single cent. That’s 30 free hours of work they’re providing YouTube with, each time they upload a video.

Depending on the content creator, it can take a couple of months before earning monetization, or it can take a few years. This is why hustle culture on YouTube can, at times, be very toxic… which is not unlike the culture among any MLM company on earth. In YouTube, and in Mary Kay Cosmetics, the deck is stacked in favour of the bold, the beautiful and those who are the most ‘commercial friendly’. But, when you’re getting the tips and tricks of the trade from someone in the trenches, they’re not going to tell you that.

Someone with heavy investments into Mary Kay Cosmetics is definitely not going to tell you how hard it is for them to earn an income because they need you to sign up to help boost the income they’re struggling so hard to earn.

Someone with heavy investments (yes we’re counting time and money) into YouTube isn’t going to tell you the cost/value ratio of a single YouTube video because the minute they do, they’re going to lose out on opportunity for earning potential. Yeah, there’s a reason why YouTuber’s don’t comment about how much money they make. The moment they do, YouTube can flag their channel and decrease their earning potential. And, in an industry in which their money isn’t guaranteed, they don’t want to risk earning less if they don’t have to.

In a 2020 world, especially with the ongoing pandemic, marketers and large corporations have realized that there’s a certain je ne sais quoi about having regular folk advertise their products. What better way to do that then to enter every person’s home/life through the technology they already have. Advertisers pay YouTube to be able to run commercial campaigns during videos on the platform. In turn, YouTube promises advertisers that their ‘Consultants’ (Content Creators/Regular Folk) will bring enough people to the platform to bring a valuable return on investment in said advertisement. When you really stop to think about it, this isn’t that far removed from well known MLM companies that do the exact same thing through Instagram and, in a lot of cases, YouTube as well.

Somehow, though, YouTube has morphed itself into a ‘Legal’ pyramid scheme. One where those at the top get richer, and those, even in the upper echelon of the platform, still seek out sponsorships and affiliate codes/links to earn the majority of their income.

YouTube was estimated to earn more than 15 billion dollars in Ad Revenue in 2019. (From Business Insider) Only between 10-30 percent of that revnue is distributed to the content creators who are responsible for earning that income in the first place. That means that between millions of content creators who earned YouTube that 15 billion dollars, high-end estimations of that would suggest they shared 4.5 billion. And that’s being reaaaaaaaaaaaaaaaaaaaaaaaaaally generous.

Sure, a portion of 4.5 billion sounds great, right? Let’s say that there was 4.5 billion to go around and approximately one million channels on YouTube to split that among. That’s $4,500… for a year of work. Now take into account that those dollars aren’t being spread evenly. Those who performed better are going to be earning a larger piece of the Adsense pie. Realistically, the dollar amount a content creator could be making from YouTube could be absolutely abysmal compared to a regular nine-to-five job. This is why there are sponsored videos, affiliate links and free giveaways. But that’s a story for another day!

The pandemic has hit this world hard. People who work for companies like Mary Kay Cosmetics can’t just go do what they’ve always done because hosting a ‘Mary Kay Party’ to show off the merchandise isn’t exactly recommended when there’s a deadly disease sweeping the planet. They’ve taken to Instagram and YouTube and made some sponsored content of their own to try and keep their company afloat amidst all that is going on in the world. And, while the blow YouTube might be suffering due to the pandemic isn’t quite as large, they’re hurting too. It’s not easy for companies to produce advertisements for YouTube when their entire staff is/was working from home. For this reason, YouTube has recorded a loss in their second quarter profit earnings from ad revenue. That is also the reason why there are so many more ‘this video is sponsored by’ and ‘this product was gifted from’ videos circulating YouTube. In a work-from-home world, content creators are learning the already low revenue they were earning from adsense is going to be even less in 2020.

What really gets me, though, is when I’m watching a YouTube video and there’s an advertisement for an MLM company or product within the video itself. It’s become a bit like Russian Nesting Dolls… an MLM within an MLM, within an MLM. As the world continues to adapt to circumstances around us, these instances are only going to become more and more prevalent. Especially since YouTube won’t be going anywhere any time soon.

And, because I went ahead and called them the ultimate modern day MLMi in the title, I will add that where struggling MLMs require high investments for you to even test the product, all that is required to test YouTube is technology and boredom. Thus making them a far superior MLM to any other in existence right now.

37 thoughts on “YouTube is the ‘ultimate’ modern day MLM

  1. Although it sounds like YouTube make a lot of money, the infrastructure required to deliver the video to thousands or millions of people is significant – and they don’t charge you for it. If they did, and a video went viral, the bandwidth costs would FAR outweigh the earnings – by several orders of magnitude. It’s part of the reason the net neutrality argument has become so important.

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    1. Net neutrality is a crazy important subject that very little people actually know about. Truthfully, I only know about the significance of it thanks to a few John Oliver episodes.

      That being said, couldn’t it be argued that YouTube is charging content creators for it by taking 70% or more of adsense money? If you don’t make the money then they don’t take it. But if you don’t make the money then your video isn’t really reaching at all, so then it’s not really costing them much more than pennies off the floor… no? It’s like a management fee, but instead of taking 10 percent of earnings they’re taking 70 percent of earnings…

      Liked by 1 person

    1. It can definitely be quite a taxing industry just to try and tolerate, that’s for sure. There are some people on youtube I really love and then there are some people (most, if we’re being honest) who are just not worth any time. You definitely seem like the type of person that marches to the beat of your own drum and doesn’t fall for online bullshit.

      Liked by 2 people

  2. “Someone with heavy investments into Mary Kay Cosmetics is definitely not going to tell you how hard it is for them to earn an income” –This may be the exact reason why I got convinced to do MLM in the past.😂 People told me it’s a scam but I thought those who said that just didn’t understand exactly what it is, so I had to learn the hard way as a consequence. Eventually, I gave up since I just wasn’t feeling it.

    Today, I still believe MLM does work but you have to be reaaaaally money-driven to the point of being greedy if you wanna be successful, which is not a good thing. Your view of Youtube as a pyramid scheme really caught my attention since I’m also looking into “trying” to earn money from it. And I can already say that it’s a hell of a job and I already have high doubts that I could ever make a single penny from it just like in my MLM experience.😅

    Liked by 2 people

    1. I agree with you that you have to be really money-driven to make a success of being a part of an MLM. If you really stop and take a look at it, though, a lot of the people who are the most successful are people who already had a platform before they started… former reality stars, daughters or sons of someone famous, etc…

      Funnily enough, the same can and is very true about YouTube.

      I truly believe that the YouTube algorithm favours beautiful people, or aesthetically pleasing people. Or, people who had fame elsewhere – like on Vine or Music.Ly and it pushes them to the forefront because it helps to grow their platform further and convince more people to sign up. I don’t think it’s impossible to make money, and I think you probably could make money from it if you kept at it long enough. I guess it just depends on what niche you’re in. (I highly recommend avoiding ‘the beauty community’ at all costs… lol)

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  3. I don’t know much about YouTube. Years ago I created an account but it’s not for monetary value. It was for fun. People make it sound like it’s easy to make money from YouTube and perhaps it is, but very few people will make money from it. Same thing with blogging. I feel like people who make a lot of money use Patreon or some other “members only” club for “exclusive members” willing to shell over their hard earned cash.

    I’ve been in an MLM in the past and it’s very much like a cult. Never again will I join a MLM. I avoid buying products from MLMs because I feel like the sellers are gonna pressure me to join. Not to mention inflated prices for their products. There’s a reason why a small % of people actually end up earning money from these things, and why so many people lose money.

    Liked by 2 people

    1. “There’s a reason why a small % of people actually end up earning money from these things, and why so many people lose money.”

      With all of the time spent buying supplies and technology, editing videos and paying for software, the exact sentence that speaks to MLMs speaks to YouTube, too.

      Liked by 1 person

      1. Your blog has fasinated me for a long time. I am 63 and Thank God I am in good health. I pray that things go Your way and I can sense some of the pain that you have been through. For me? I actually left America from 2007 until 2013. Now look where we are! Wow! Thanks again! 🙂 PS Even though I am an old guy, I have a 24/7 Streaming Reggae Station in San Diego. You can go to our home page, click on the listen button and hear the station. Enjoy: https://www.bigreggaemix.com

        Liked by 1 person

  4. I had never thought about it in this aspect, largely because I think that I’m a few years past the generation that turns to YouTube for everything. I still think the term “influencer” is hilarious. I think what YouTube and social media in general have done is make fame a commodity. There have always been anomalies like the Kardashians (look up the Gabor sisters) who make something of themselves after first becoming famous, but now anybody with a webcam and iMovie has a fighting chance. Great entry!

    Liked by 1 person

  5. I agree with most of it. If you are dedicated though and money driven, you can make a living off of things like youtube. I wonder if streaming platforms like Twitch work the same. I have nothing against it tbh. My problem is how many people are doing it. People with no talent at all what so ever and are making money from it for talking about their day. LOL. ‘I am a instagram selfie queen, I should also make a youtube account so creepers can creep me and make money from it’ On platforms like Twitch that probably work similar when it comes to getting paid, I always find it disgusting when females would have more followers, subscribers or viewers for doing nothing their entire stream or really sucking at video games or something. One thing both youtube and streaming has become over the years is very competitive and I think that’s a good thing. Not everyone should be able to make a living from these platforms it is like saying anyone can be a rock star.

    Liked by 1 person

    1. I agree that not everyone should be able to make a living off of these platforms. I also think that YouTube capitalizes on the notion that ‘Anyone can do it’. They get more people to sign up, and when more people sign up their analytics increase. I freaking love YouTube. I really do. But there are some people on the platform with giant audiences who do not deserve the audience they have. Harmful people, people YouTube just ignores. People who use their platforms for harassment and violence and YouTube just pretends it does not exist. It’s crazy to me that they can mandate community guidelines of what people can and cannot say… but as long as someone doesn’t say one of there buzzwords, they can make a full fledged harassment video like Onision.

      Liked by 1 person

      1. I completely agree. The internet is a breeding ground for things like this unfortunately. I use youtube for music and entertainment, but steer away from the likes of Onision. However some of it is really not our business. I didn’t even know who Onision entirely was until shit hit the fan. Do I agree with Onision or what he did/does? No…but do I need to know his life story or care to NO. That is the problem though, we idiolize these people. They are just human beings and when they choose such lifestyles, it can easily be ripped apart, it is even more sad when they rip entire people’s representation or dignity apart by assumptions. Shane Dawson is another youtuber who was accused of a lot of crap he never did or mean harm by. Some were very desperate attempts like saying in his older videos he used a sock puppet so he must be a pedophile or something. I saw his older videos and I know for a fact it was used only for comedy and entertainment purposes. I have heard pleads from other youtubers or streamers who know Shane Dawson personally and are his friend. They say he is not that kind of guy at all and the things being said is really horrible. The thing is when you claim someone is a pedophile or a rapist you need to be ready to have 100% proof, because that is something that is very serious to claim somebody of not to mention it can completely cripple them as a person and not just their career. On the Onision topic whenever I see it, I refuse to comment or say much because rather it is 100% true or not I never knew enough about him or the claims against him. There are people who have never even watched his videos and are jumping on the band wagon. Onision is not innocent, but like if you don’t know the guy or his history on youtube perhaps just stay out of it. You know? But again that is society. It is why I don’t idolize these people because they are just human beings. Some make simple mistakes like you and I do, to later be savatoged for it. It’s sad. Onision is just one example of something that ended up being true. I avoid the likes of those people for a reason. I use anything on social media and/or things like youtube with my own discretion and ignore the bad.

        Liked by 1 person

  6. ‘the top get richer’ wait a minute…that is just society. That is everything. I don’t see the big deal or why youtube should be illegal. After all, it is a choice. I am sure most content creators are aware of how it works and as long as they are okay with it and are satisfied with their career, I don’t see the harm. We live in a capitalistic society where the rich get richer and the poor get poorer. Changing that idea is a lot deeper than bashing youtube.

    Liked by 1 person

    1. I didn’t say that YouTube should be illegal. I just merely pointed out the similarities between the corporate structure of YouTube and that of widely known MLMs in this world. I actually quite enjoy YouTube and probably watch a video of some sort every single day.

      Liked by 1 person

      1. True, and I understand your point of view. Like that, the top getting richer is just a common theme in our society. I work in retail (cause I dropped out of college and never went back stupidly) and I will never see the benefits of corporations make. Corporate figured a $2 bonus was enough during the pandemic. You don’t think I was livid? Especially when they ended it and masks were not mandatory for customers but they were for employees. I am like if I have to wear a mask. you are telling me there is still a hazard so where is my hazard pay you cheap mofos. xD The pyramid scheme though is yes not the most ideal. Youtubers however do make a living from youtube, they are just very dedicated and money driven. I don’t see any harm in it. I don’t feel youtube is doing anything different from other companies stealing money from their employees. My store director gets a bonus every year just for cutting employees hours. When they cut my hours it is stealing and makes it harder to pay bills. Luckily I am on a shift now where my hours are pretty much untouchable because I am needed, also because of my experience and dedication to the company etc. It is not the most ideal job, but it makes my bills right now. 🙂 Corporations make billions every year and run this world. Somebody will always make more than you. That is just how capitalism is and it exists everywhere, even in socialistic countries. It is however different than the pyramid scheme, but still kinda the same idea.

        Liked by 1 person

  7. Your post definitely nailed a lot of valid points on the infrastructure behind YouTube. Considering that sometime last year, there’s been videos from creators who were worried about losing monetisation due to the FTC’s COPPA rule where videos must be marked as safe for kids or not. I think creators need to realise that the amount of time and energy they give to YouTube is essentially free labor and it’ll hurt them more and not the platform. There’s no return of investment from YouTube.

    Liked by 1 person

    1. It really is free labour!
      I agree that it’s place that needs to be regulated and the COPPA rule definitely helped, but I do think there’s a long way to go because people are still talking about the same things, they’re just bleeping out the words that YouTube’s algorithm would catch. (Loop holes for everything)

      Liked by 1 person

      1. Very true. I personally know a YouTube creator who got upset over the fact that every time she curses or says certain words on the video when she does her makeup reviews, she ends up not getting her videos monetised. Part of her personality is that she swears a lot and has a great sense of humor. So she ended up making a Patreon page in hopes folks will support her through the platform.

        Liked by 1 person

  8. Nicely done and very interesting. Slightly off topic but at the same time totally related – YouTube is suddenly doubling down on Adverts. Previously I could listen to entire meditation and sleep hypnosis videos and the ads were at the beginning only. Now they occur every 10 minutes. It’s jolting when trying to sleep or meditate. So now my choice is go premium or stop using YouTube to that end. This all just happened last night and this morning. thus, your post is freakishly good timing.

    Liked by 1 person

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