YouTube announced on September 20 that it will start sharing advertising revenues with creators of its bite-sized video feature Shorts from early 2023, as the Google-owned platform looks to counter the rising threat from rivals such as Meta and TikTok across the world.
This move is part of major changes the company is rolling out to its YouTube Partner Program, enabling Shorts creators to apply and make money through different formats on the platform.
Starting in early 2023, Shorts-focused creators can join the programme if they have 1,000 subscribers and at least 10 million views on their short videos over 90 days. The existing programme currently requires YouTubers to have over 1,000 subscribers and 4,000 watch hours over the past year.
While YouTube has been sharing advertising revenues with creators of long-form videos on its platform for more than 15 years, this step could provide them with an edge over its short video rivals in attracting new creators while retaining existing ones on its platform, since none of them currently has a revenue sharing arrangement in place, although several players have announced dedicated creator funds.
"This is the first time real revenue sharing is being offered for short form video on any platform at scale," said YouTube chief product officer Neal Mohan during a company event. "We want YouTube to be the place that gives them the greatest support within the changing digital landscape today."
He mentioned that YouTube has paid creators, artists and media companies more than $50 billion across the world over the past year.
To be sure, Facebook had announced in February 2022 that it will test sharing of advertising revenues from its short video service Reels, while TikTok also recently started experimenting with sharing of ad revenues, but its efforts are limited to creators who produce the top four percent of best-performing videos.
How does it work?
During the event, Mohan said the ads for Shorts will be different from those that appear on long-form videos. They will run between videos in the Shorts feed and not attached to specific videos. Every month, revenue from these ads will be pooled together to pay out Shorts creators as well as help cover costs of music licensing.
Creators will keep 45 percent of the revenue share, which will be distributed based on the number of views their Shorts get in each country. Mohan mentioned this revenue share will remain the same even if they use music in their videos.
"This lets us remove all the traditional complexities involved with music licensing, keeping things simple and accessible for everyone... creators (will) never have to worry about chasing down music rights just to use the songs that they love," he said.
That said, it's worth noting that YouTube has traditionally given 55 percent of its ad revenue to creators while keeping the remainder as part of its partner programme.
Tara Walpert Levy, a vice president at YouTube, attributed the difference in commissions to more complexities in ad sales.
"We looked at the unique characteristics of the ecosystem. The ad revenues are pooled versus allocated and assigned to specific videos, the creative process is different, in particular, eliminating the complexities in music," Levy said at the event.
"There's a lot of investment that's required to support more creators, more content, product innovation... So we thought 45 percent would create a sustainable long-term business that we could continue to invest in and also deliver the maximum revenue back to creators," she said.
The company said this feature will eventually replace its $100 million Shorts fund that was announced in May 2021 to reward top Shorts creators creating original content over the course of 2021-2022. "We expect the majority of our Shorts fund recipients to earn more money under this new model," Mohan said.
Apart from this, YouTube is extending its tipping feature 'Super Thanks' to thousands of creators in beta, with a complete rollout expected next year. This will enable viewers to tip creators of their favourite Shorts in order to show their support.
New tier with lower requirements
At the event, Mohan announced plans to add another tier to its YouTube Partner Program with lower requirements that will help creators start making money earlier in their journey through fan-funding features such as Super Thanks, Super Chat, Super Stickers and Channel Memberships in 2023.
It will apply to creators across long-form video, live stream, and Shorts content with more details expected to be disclosed next year.
The video sharing platform also unveiled Creator Music, a new destination within YouTube Studio, that will enable creators to browse through a large catalogue of songs and purchase affordable, high-quality music licences to use them in their content without giving up part of their ad revenue.
Alternatively, they will also be able to opt for a new revenue-sharing option wherein the creator splits a portion of their revenue with the artist and associated rights holders of the track. It is currently available in beta in the United States with plans to expand to more countries in 2023."With Creator Music, we will be building the bridge between creators and artists on YouTube," said Lyor Cohen, global head of music at YouTube.