Youtube has been constantly asking me to monetize (define: to convert your videos into making money) my videos. I kept ignoring it due to the legalities and the tiny 2 cents a month I would be making. However one day I finally decided to monetize my videos. It was very easy to set up an account on Google Adsense. Linking the google account you already own and your bank account.
Google actually will deposit a small amount into your bank account (like 10 cents) to confirm that your bank account is set up right. Within the next month I had earned $10 from one video on my youtube account. To make any money from your videos you need to 100% own all the rights to the video, especially the music. You don't need to own all the rights to the videos on your account, you can pick and choose which ones to monetize.
Just because you monetize your videos doesn't mean you'll make money. If your videos are only getting 100-1,000 views you won't make much at all. The video that makes me almost $10 every month has over 500 comments (30 or more comments a month) and has a total of 113,100 views (10,600 views a month). If only I could double this by getting a second video with similar statistics. Though the best part is, I only had to make this video once, upload it, and now I just sit and watch $10 come in every month from doing nothing more.
There is two types of advertising you can use on your monetized videos.
Overlay in-video ads - the ad is displayed at the bottom of the video.
TrueView in-stream ads. - the ad is played like a commercial before the video is played.
I would suggest using the Overlay in-video ads versus the TrueView in-stream ads. Most people (unless you have a really interesting video) will not take the time to watch your video if they have to watch a commercial before hand. This will limit your views and earnings. while the Overylay in-video ads doesn't disrupt the video as much and allows more users to watch your video because they won't be irritated by a commercial.