How and Why to Monetize Your Twitch Channel

In the last article in the How to Stream on Twitch series, I told you how the affiliate and partner programs worked. In today’s, I’m going to explain how you can use those and other options to monetize your stream and start making money off the hard work you’ve put in.

What is Monetization?

Monetization refers to turning a non-revenue-generating product, service, hobby, task, etc into dolla dolla bills, y’all.

For our purposes, when I say “monetize your stream” it’s about turning your Twitch Channel into a source of income you can use to support and grow your channel with new hardware, games to stream, art supplies, and to even feed yourself and pay your bills.

Hands fanning out several hundred dollars
Most streamers will be unfamiliar with money, but this is what it looks like.

How much do I earn from Subs

Depending on your partnership level, location, and tax situation the amount you earn per subscriber can change a bit.

However:

A good rule of thumb is about 50% per subscriber level, with Twitch parent company Amazon pocketing the rest.

That means around $2.50 per $4.99 monthly subscriber your channel maintains.

What percentage of viewers or followers should I expect to sub?

This varies considerably from channel to channel. I sent out email after discord message after Twitter DM asking various streamers of a variety of channel sizes if they could guess what percentage of their followers or viewers subscribed.

An ape thinking, "Do Ninja's followers subscribe 30% of the time or 80%?"
It’s a question for the ages.

The results: Anywhere between 5% to 70%.

Whew, wouldn’t it be nice to be that 70% streamer? I couldn’t find a consistent reason any particular streamer had more or less subscribers.

In my opinion, it’s a combination of the following factors:

  • How often the streamer uses Calls to Action without annoying the piss out of their viewers.
  • The perceived need the streamer has of the subscription revenue.
  • The quality of emotes a channel has. I found several channels where the streamer claimed people subscribed only for the emotes and were never in the channel to watch.
  • Obscenely large channels that are often in subscriber-only mode, e.g. Evo or AGDQ channels during events.
  • Viewer hype.

That last one is interesting because you won’t have much control over it.

But:

For streams where the regulars in chat would respond with hype trains, or sending messages of excitement for a new subscriber joining the group, it’s easy to see how it could pump up your sub numbers.

How Does Twitch Pay Streamers?

During the onboarding process for affiliates and partners, you will link a bank account from your country of registration to your Twitch account.

The payment process used to be Net-45. This made budgeting a nightmare for ADHD streamers bad with finances like myself.

Nowadays it’s at Net-15 which is substantially nicer.

If you’re unfamiliar with the terms, it means Twitch will begin the direct deposit into your account 15 days after your reach the minimum payment threshold.

As of the writing of this post, the minimum payment threshold is $100. If a month doesn’t make it to $100, then it will roll into the next months, and the next, and so forth until you do meet the threshold.

What Counts Toward Twitch’s Minimum Payment Threshold?

Subscriptions and bit cheering both contribute to your payment threshold. Alternate revenue sources I’ll mention further down do not, which should be obvious when we get there.

It can be in any combination as well, which is great because different types of streams will monetize their content differently.

Speedrunners are more likely to have people cheering with bits, especially when they hit PBs or have gold splits.

Artists and musicians are more likely to get cheers as they finish a piece or song.

Other types of streamers will rely more on subscribers to get that number.

There is one important distinction between the two, however:

Twitch does not take a cut from the bits you earn from cheers.

When a viewer purchases a bundle of bits, Twitch takes their cut right then and there. If you receive a 500-bit cheer, then congratulations you’ve just net yourself five buckeroos.

This means it only takes 20 subscribers and 5,000 bits a month will let you hit the minimum payout.

How Do I Change or Set Up Twitch Payment?

This is all done during the onboarding process initially, but if you need to change something it can be found in the affiliate/partner section of your creator dashboard.

Now, what isn’t required during onboarding is your tax information.

But:

Twitch will not payout to a channel that hasn’t submitted their tax paperwork.

This isn’t some arbitrary rule or a scammy way to get your Social Security Number. Twitch does not want to be on the wrong side of the IRS and does everything by the book so you’ll have to as well.

Speaking of…

Does Twitch Handle My Taxes?

Man laughing and pointing at the camera
You fucking wish.

Absolutely not. You are not an employee and they will not be taking city, county, state, federal, social security or medical (hah!) out of your “paycheck”.

As far as they are concerned, you are a freelance entertainer that has a contract they payout for services rendered.

What Twitch does handle is submitting what they paid you to the IRS or whatever appropriate tax authority you are subject to.

This means you absolutely must make sure to do your taxes when you get your forms from Amazon the following January!

The IRS will already know exactly how much Twitch has paid you. Tax laws vary from state to state and federal tax law changes annually, so make sure you find out from a reputable tax authority if you are required to file your earnings or not and the best way to do that.

If you are unsure and expect to earn more than a couple hundred dollars, then set aside anywhere from 15-30% of every Twitch payment explicitly to pay future taxes.

Best case scenario you gave yourself a new savings account to buy games with a year from now. Worst case scenario you can pay your taxes.

I am not an accountant, and as previously mentioned I am horrible with finances. If you have any questions regarding your tax situation, call a Certified Public Accountant.

What you shouldn’t do is trust some random asshole on Reddit who says not to worry about it.

Are Twitch Donations Taxable?

Speaking of random asshole advice, don’t let anyone try to convince you that “donations” made through PayPal or elsewhere from your Twitch viewers or the cheers with bits are “tax-free donations”!

Do not suggest to your viewers that any money given to you through PayPal or elsewhere is a tax-free donation either.

Tax-free donations are explicitly only for non-profit and not-for-profit entities, which is an immensely complicated topic that requires lots of paperwork to form and usually an accountant to help!

I volunteered with Skepticon years ago and it took us years to figure out how to properly incorporate as a 501(c)3 and it was only possible due to a really awesome accountant who wrangled all of our receipts and handled all of the paperwork for us!

Even without being a CPA myself, I can assure you as an Authentic For-Real Dinosaur and Streamer:

You did not accidentally incorporate and form a 501(c)3 when you started your broadcast

Whew, with that out of the way:

Alternate Revenue Sources

Getting a 50% bite taken out of every subscriber is a huge pain in the ass. Don’t feel too entitled to the cut they take though:

Twitch’s platform, their streamlining of the payment process, and assuming all the risk for viewer payment info is why viewers feel comfortable subscribing over Twitch instead of just mailing a five-dollar bill.

Not to mention those sweet emotes.

But:

There are other ways to monetize your channel that don’t require Twitch taking a 50% cut.

Patreon

I would recommend that any artist or musician definitely monetize their content through Patreon. It’s easy to set up tiers this way and provide bonus content to your patrons through the site. You’ll get a larger cut and some patrons will still subscribe through Twitch for emotes.

It’s like double-dipping!

“Donations” or “Tips”

Drop a PayPal link into your panels below your stream to allow viewers to send you money directly.

Jar of coins knocked over and coins everywhere
May your tip jar runneth over.

Streamlabs even offers extensions like donation progress bars if you are having your channel viewers fund something specific. A few examples might be a new video card, a sweet capture card, travel costs for going to a tournament or convention, etc.

Look into setting up a PayPal business account for this, it can make transfers less of a headache and the reports are very useful.

Commissions or Requests

If you draw cat assholes or paint dinosaurs, then it’s worth it to let people know if you do commissions and that you can do them live on stream.

Don’t devalue your time, skills, and labor either!

Never charge less than $50 per hour for this kind of work, if not more since you are going to stream the work live.

And:

Always charge shipping separate to this based on how the viewer wants the item shipped.

If you aren’t an artist, you can still take advantage of this though. I’ve seen professional fighting game players charge for practice sessions 1on1 streamed live or offline.

Another idea might be to monetize game requests, which can be as simple as “If you buy a game from this giant excel list, I’ll play it next”.

Affiliate Marketing

You’ve seen affiliate marketing all over this site, it’s those links to Amazon for products I promote or like or think would be useful, like I did in my Good Equipment for Streaming guide.

As a streamer, you have a lot of sway over the purchasing decisions of your viewers. You really do! Don’t be afraid to monetize that sway.

I’m not saying to constantly drop links into chat for $60,000 items and demand your viewers purchase it. Definitely don’t spam them!

But if someone asks you about the gear you use, don’t be afraid to drop an affiliate link in chat for them. You can even set up a Twitch Panel Extension that links directly to your Amazon Affiliate account and displays a list of products you use!

The neat thing about Amazon Affiliates specifically is if they click the link, then you get a percentage of anything they purchase over the next two days!

It doesn’t cost the viewer anything extra, you would have recommended things you like anyways, and you can take money away from Jeff Bezos.

Honestly, it’s the best.

If your viewers really want, you can set them up with a baseline link to the Amazon homepage with your referral ID in it and ask that they just use it anytime they shop.

In addition to Amazon, there are plenty of other companies that do affiliate marketing. If you find yourself using a particular item or brand, check out their website or google “Company + Affiliate” and see what comes up.

It won’t take long before you realize why everyone wants you to sign up for Audible or Squarespace!

Merch / T-Shirts

People love to not be naked in public, it’s true. And what better way to not violate decency laws through the nation than to rep a dinosaur mascot, cat asshole, or other merch you’ve designed?

If you’ve paid for or created your own emotes be sure to see about using them on your shirts or swag.

You’ll be surprised at how many viewers will drop $25 on a shirt before ever thinking about dropping $5 on a sub!

When Should I Expect Millions?

I mentioned in a much earlier article in the How to Stream on Twitch and Succeed series how to plan a roadmap of sorts to success.

Twitch takes a lot of work to succeed and a lot of time before it’s very profitable. Also, Twitch has been working to monetize you and your viewers the entire time.

It’s not fair.

But you should keep expectations on the low end for awhile and plan on making zero until you get a better idea of your earnings.

Then you can focus on what’s working, what’s not, and where to put your efforts (such as commissions vs merch).

In Closing

I think that’s more or less wraps up how to monetize a channel! If you’d like to know when the next article is live, sign up for the How to Stream on Twitch newsletter.

If you have any questions about streaming, I’d love to hear them because I’m running low on ideas to fill this blog with! I may branch out and add some more material such as stream overlays, extension guides, and even stream news. We’ll see!

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