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Make money Live Streaming – How Monetization works on Twitch

Are you considering live streaming as an extra source of income? There are a few ways that you can monetize your Twitch content, but I’ll warn you now; It is not a get rich quick scheme. In fact, most creators on the platform do not make even minimum wage. Of course, there are always exceptions to the rule, like Shroud or Ninja, but those individuals worked very hard to get where they are over many years. That isn’t to say you can’t be an exception, only that it isn’t easy. With that said, it can be a source of extra income on the side to spend on your hobbies, even at the entry-level.

Twitch offers a few monetization options to its user base, but you are not actually restricted to using just them. Let’s get into how monetization works on Twitch, and how you can make money live streaming!

Should you feel bad about wanting to monetize your content?

Many individuals I have spoken to have mentioned that they actually feel bad asking people to subscribe to their content. They feel as though it is disingenuous, and were led to believe that it is taking advantage of people by mentioning subscriptions. It’s time to dispel this illusion.

There is absolutely nothing wrong with getting paid to do something.

You should never have to work for free if you don’t want to. Time is valuable, and knowing that time has value, means your work has value.

Think about it like this; Just because you aren’t working for somebody else, does not mean you do not have a right to work for yourself. As such, by working for yourself, you are an entrepreneur, and your own boss.

Think about it like this; Just because you aren’t working for somebody else, does not mean you do not have a right to work for yourself.

So the next time someone tries to make you feel bad because you mention subscription perks, or calls you a sellout, ignore them. You have a right to make your own path in life. If you are happy, that is ultimately all that matters.

Explaining how Monetization works on Twitch

If you have ever dabbled in blogging or internet marketing in general, then the methods used by Twitch to monetize your content will be familiar. For example, I run ads on this site, which will earn a bit of money from impressions, and even more from clicks. Additionally, I take part in a number of Affiliate marketing programs and promote products that streamers can utilize to improve their production value.

Twitch utilizes these exact methods of income generation, complete with an affiliate agreement. When you become an “affiliate”, you are agreeing to basically advertise the Twitch streaming service, and work to grow the platform as a whole. Instead of paying you a salary, or an hourly wage, your incentive is to become a sub-contractor and earn a commission based on your ability to convince people to spend money on your channel, supporting both you and the platform as a whole.

When you become an “affiliate”, you are agreeing to basically advertise the Twitch streaming service, and work to grow the platform as a whole.

In fact, Twitch takes 50% of all subscriptions earned, as per the contract agreement that you sign states. By normal affiliate program standards, this is actually very generous; Amazon Associates, a program known to be easy to get into that pays decent rates caps at 10%, but most categories are closer to 2% per sale. However, the amount of work that goes into the Twitch channel is significantly higher than that of the standard sales-based affiliate program.

How to make money live streaming as a Non-Affiliate

Even before you become a Twitch Affiliate, there are many external resources that you can utilize to make money live streaming. There are quite literally thousands of affiliate programs outside of what Twitch itself offers, but I’m going to be focusing on a few.

But first, I’m going to address something important:

Advantages and Drawbacks of Non-Affiliate Monetization.

AdvantagesDrawbacks
You aren’t tied to an Exclusivity clauseNo Sub button directly on platform
No need to have 3 concurrent viewersNo Emotes
No need to get 50 followers before you can qualifyLack of Transcoding

Patreon – a “Sub button” for Twitch for the unaffiliated

The first option to earn a regular income by streaming on twitch is to incorporate the use of Patreon. This is a service that tens of thousands of creators on YouTube utilize regularly as a means to supplement their income. I’m sure you’ve heard the phrase “And thanks so much to our Patreon supporters!” followed by some b-roll of the names of supporters on video.

You can just as easily utilize Patreon for your efforts on Twitch. You can create a panel that will have the link to your Patreon page, and during the stream, simply mention it, as well as the benefits the subscribers would get. Perhaps set up a scene on OBS with the names of your supporters across the platform as an incentive for users to subscribe.

The benefits of using Patreon

  • Custom rewards for your subscribers
  • Control over the price of subscriptions
  • Ability to offer physical goods
  • Not tied to the Exclusivity agreement

The Drawbacks of Patreon

Of course, it isn’t all sunshine and rainbows. If you forgo the Twitch Affiliate Agreement, you will lose access to emotes and bits entirely. Though, with the BetterTTV extension, you will regain your ability to have emotes, assuming your audience has that extension.

Streamlabs Donation (Taxable)

Next on the list of un-affiliated monetization methods to make money live streaming, you have the Streamlabs Donation link. This service is basically a PayPal.me stand-in, with some added benefits.

For example, with the Donation link placed in a Twitch Panel, a user can donate any amount to a stream, and it will show up on stream as a Donation Alert. To see it in action, Check out this video by JackSepticeye where he donates to streamers to see their reactions.

Benefits of using Streamlabs Donations

  • Shows up as an alert on your stream
  • Causes you to instantly react in various ways
  • Hypes up the rest of your audience to keep the train rolling
  • Easy to set up
  • 100% to you, minus whatever PayPal takes for payment processing

Drawbacks of using Streamlabs Donations

  • Risk of chargebacks

If the donor insists on proceeding with the chargeback, Streamlabs will be elected to dispute the chargeback.

There will be a chargeback fee of $15 deducted from your balance by our card processor, not by Streamlabs. 

Streamlabs on Chargebacks

Twitch Affiliate methods to make money livestreaming

If you qualify for, and are ready to accept the terms of the agreement, the Twitch Affiliate program, then you get access to a number of platform-specific incentives for your audience. I briefly mentioned them above, but now we get into the nitty gritty. These methods are the “Official” ways to make money live streaming on Twitch, and are what most people think of to start monetizing your channel.

Bits – Secure Donations to streamers

Many people mistakenly call bits a virtual currency. However, this is inaccurate, as they can only be used on the platform itself. Rather, they are actually classified as “virtual goods” that can be redeemed to “cheer” for streamers. Bits are commonly used to show the audience’s appreciation for the content that you produce as a streamer, as they can be redeemed for money when they are received as a cheer.

1 bit is equivalent to 1 cent when redeemed.

They cannot be redeemed by the person who bought them.

Advantages of Bits

  • Immunity to chargebacks
  • Your audience can redeem them for fun features
  • Show up on Streamlabs and Streamelements alerts when cheered.
  • Leaderboards for top cheerers built into the platform

Disadvantages of bits

  • They cost your audience a bit more than you get from them
  • Your audience does not have much to show for a bit redemption

Subscriptions – And Incentives to promote subscriptions

The other big way for you to monetize your channel on twitch is channel subscriptions. These are monthly charges to your fans, coming in three flavors:

  • Tier 1 – $4.99/mo
  • Tier 2 – $9.99/mo
  • Tier 3 – $24.99/mo

During the month of September, these charges are reduced a bit to incentivize a large number of subscriptions in an event called “Sub-tember”. During this event, the costs are as follows:

  • Tier 1 – $3.99
  • Tier 2 – $7.99
  • Tier 3 – $19.99

Users who subscribe will be able to use any and all channel emotes associated with the Tier. They will also gain cumulative sub-badges over continuous support of your channel, allowing them to put the badges in their names while on your channel.

Ad Revenue

When a user joins your channel to watch your stream, they are greeted with a pre-roll ad. This ad does not benefit you in any way, but you can actually disable this pre-roll ad by manually triggering an ad break.

If you run a 30 second ad, Pre-roll ads are disabled for 10 minutes.

Running a 60 second ad will slap those pre-roll ads asleep for 20 minutes.

The largest break, 90 seconds, will disable those pesky pre-roll ads for 30 minutes.

The best part, you actually get credit for running those ads too, though admittedly, it doesn’t come out to much.

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