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Rhett McLaughlin and Link Neal, the 32-year-old comedians known professionally as Rhett & Link, wanted to be television stars. They were on the verge three years ago when The CW network canceled their variety show after four episodes. That's when they started building a business centered on YouTube videos. Two years ago they persuaded a toy company called AJJ Cornhole to sponsor a music video—an ad, really—about a bean-bag-tossing game. Although the video generated more buzz than money, it led to more work. Since then, Alka Seltzer, McDonald's (MCD), the Food Network, Cadillac, and other brands have sponsored Rhett & Link videos.
McLaughlin and Neal have become part of an elite group that's making good money off their YouTube videos. Earlier this summer the Web analytics company TubeMogul released a study estimating that the top indie video producers on YouTube earn north of $100,000 in annual advertising revenue alone. Although the video-sharing site may not be minting millionaire entertainers yet, six-figure incomes are within reach for the most industrious creators.
So far in 2010, Rhett & Link videos have averaged 119,457 views per day, according to TubeMogul. "What really sets them apart—lots of YouTube celebrities have more daily views—is their leadership in doing branded integration," says David Burch of TubeMogul. "No YouTube celebrity other than [cosmetics guru] Michelle Phan has more branded views in 2010, according to our estimates." By branded integration, Burch means sponsorships. In some Rhett & Link videos, products appear on-screen. In others, the name of the company is flashed at the end. Their latest opus is a music video produced for Carpenter, a cushioning manufacturer. (Sample lyrics: "Do you remember back in middle school/When my trunks fell down at the pool/Everyone laughed, except for you/You just let me hold you in my bedroom/My favorite pillow...My favorite pillow...") At the end, the name of a Carpenter-owned sleep-advice website appears.
During its first week online, the pillow song was viewed more than 2 million times and generated more than 16,000 comments. "As we've come along, we've educated our audience, getting them to understand that brands do not compromise entertainment," says McLaughlin. "For us, they enhance it. They enable it." They also enable McLaughlin and Neal, who are both married with children, to support their families.
Rhett & Link get two streams of income from YouTube. Aside from the sponsorship money, which is all theirs, they receive advertising income because Rhett & Link have been designated an official YouTube partner. Creators must apply to become partners, and so far about 10,000 have been accepted. Members get a cut of the ad sales on their channel. The ads are sold by Google (GOOG), which owns YouTube. The only thing McLaughlin will say about Rhett & Link's income—YouTube partners are contractually forbidden to discuss their ad earnings—is that he and Neal are no longer scrambling for survival. "We're in a place now where we don't have to constantly be pursuing a project every couple of weeks to make a living," he says. "We can be choosier."
For most, the YouTube partner program doesn't provide enough to survive on. So video makers hustle on multiple fronts: They sell T-shirts and mugs to fans on their YouTube pages. Musicians use videos to sell songs on iTunes and tickets for live gigs. Artists list P.O. boxes on their pages, and fans and companies send them free electronics, Snuggies, and other stuff. "That's another form of income," jokes DeStorm Power, a Brooklyn (N.Y.) YouTube star who creates R&B music videos.
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