Commoncraft is a two-person (husband and wife) company, and they want to remain small. Low resolution copies of their videos are available for non-commercial use at no cost, and they license high resolution versions for commercial use.As shown here, they have a very low-tech studio, keeping their investment low. Their time is the only significant cost of producing a video.
Distribution cost is also nearly zero. The non-commercial version of a video is distributed at no cost on YouTube and other video sites. They distribute the commercial version from their own server at minimal cost.
Marketing also costs close to nothing. They post a video on Youtube, and wait for users to find it and tell each other about it. They do "viral" marketing.