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Toronto startup helps YouTube and Instagram stars make money

Sylvia Ta put up a her first YouTube video six years ago to show a friend how she gave her straight hair volume. She didn’t think she was starting a career.

Sylvia Ta put up a her first YouTube video six years ago to show a friend how she gave her straight hair volume. She didn't think she was starting a career.

"I put up the video and ignored it for a little bit – when I checked back and saw that it had a few thousand views," says Ms. Ta, 23, who quickly branched out into shopping and fashion videos. "When I first started, there was no such thing as monetizing your content."

Now, Ms. Ta has more than 186,000 YouTube subscribers and says she makes a living putting up one video a week.

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"I won't answer the question of how much I make exactly," she says. "But I can tell you that I just purchased my condo downtown in Toronto and I was able to do that with revenue from YouTube."

YouTube lets video creators make money by selling ads and subscriptions through the YouTube partner program. But another way Ms. Ta earns money is through the services of Parsel, a Toronto-based startup founded by Josh Brandley and Hamid Abbas in 2014.

Parsel lets YouTube and Instagram creators set up webpages to sell the products they talk about.

It also matches creators with companies who will pay them to make sponsored videos – videos featuring that company's products.

"We realized it's the distribution platforms that are really making the money out of this – Google owns YouTube and Facebook owns Instagram," Mr. Brandley says. "We wanted to give the influencers a way to make more of the money coming out of their expertise and their popularity."

On the Parsel page for Yolanda Gampp – a Toronto baker known for cakes that look like Thanksgiving turkey, pizza and loaded nachos – viewers can watch a video on how to make a grilled-cheese cake and then buy some of the ingredients. They can also buy the tools she uses, from spatulas to Kitchen Aid mixers.

Ms. Ta sells clothes and makeup on her page.

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"I had people asking me all the time in the comments 'Where can I get this? Where can I get that? – so I was already putting links under my videos," Ms. Ta says. "With Parsel, there's added revenue so if they buy, I can get a cut – it's another source of revenue because obviously if consumers go into stores, we can't get a commission off that."

Mr. Brandley won't discuss Parsel's revenue. He says the company, which now has 10 people on staff, has raised about $1.2-million from angel investors, friends and family.

"We have three revenue streams: product sales, native advertising and sponsorships," Mr. Brandley says. "All three are in place and seeing significant month-over-month growth."

Parsel doesn't use technology to help companies make sponsorship deals with creators, it does that the old-fashioned way, Mr. Brandley says.

"Once we know the company's objectives and have a well-defined budget, we then contact specific creators who we know will fit, who we think will be excited and who are great to work with," Mr. Brandley says. That means Parsel looks for creators who are "good wholesome people who do this for a living," Mr. Brandley says. "Not just some guy who can kick himself in the head."

While Mr. Brandley wouldn't talk about the money that can be made in sponsorship deals, Ms. Ta says companies pay anywhere from "a couple hundred bucks to 70 grand for a two- to three-month project."

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"Before, it just used to be that they'd give you products for free," she says.

Social media stars can have large numbers of loyal followers, and that's attractive to companies, says Darren Dahl, senior associate dean at the Sauder School of Business at the University of British Columbia and the editor-in-chief of the Journal of Consumer Research.

"These people are leveraging their brand equity, their star power," Mr. Dahl says. "The notion of a celebrity endorser isn't new, but now people who may not have been able to drum up fans and support years ago can now become popular really quickly."

But Scott Galloway, professor of marketing at the New York University's Stern School of Business, says so far, attempts to get consumers to buy things while watching videos or reading news stories online hasn't worked. After watching videos, people may look for a product in the stores, but they're unlikely to buy it online on the spot.

"Every media company in the world has visions of a buy button but it hasn't worked," Mr. Galloway says. "It's a consumer behaviour thing, when I'm drinking coffee and reading the paper in the morning, I'm not in a buying frame of mind."

Mr. Galloway says brands are interested in sponsorship deals with YouTube stars, but the bulk of the money goes to a handful of the biggest stars, like YouTube makeup artist Michelle Phan, who has more than eight million subscribers and 1.2 billion views.

"You can get millions of views and make a few hundred to a few thousand dollars a month," Mr. Galloway says. "Most people probably can't make a real living at it."

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