Social Media Giants to Top Creators: Your Terms of Service Have Changed
On Sept. 20, YouTube, led by Susan Wojcicki, unveiled a series of creator-driven announcements, including a plan to bring its “secret sauce,” its revenue-sharing model, to its shortform product, Shorts. But there’s a catch: While longer-form YouTube videos pay out 55 percent of their ad revenue to creators and 45 percent to YouTube, the shortform version flips that, with only 45 percent of total revenue going to creators (the rest covers costs of music licensing). Creators’ payouts will be determined by their contribution to the total Shorts views every 30 days, which means that as more users upload Shorts, it could become more difficult for a user to take up a larger percentage of total viewership, likely leading to even lower revenues for influencers.
Twitch stunned its users the next day with an update of its revenue-sharing model. Premium creators have their own deal terms with Twitch. Instead of receiving a 70-30 split on subscription revenue, where 70 percent goes to the creator, premium streamers will receive that split only up to the first $100,000 earned. Everything after that will drop down to 50-50, a breakdown that most streamers who are partnered with Twitch, run by CEO Emmett Shear, will be receiving.
The changing revenue share might seem counterintuitive considering the fierce competition for talent on major platforms. But as these companies seek scale and efficiency (like how Meta shares Reels with both Facebook and Instagram), and creators — who are willing to extend themselves across most major platforms — seek reach and income, the platforms are seeing an opportunity to reassert themselves.
Every social platform has had to shift towards shortform video due to TikTok’s rapid rise (YouTube Shorts and Facebook and Instagram Reels as well Snapchat Spotlight). The format’s emergence has created a new opportunity. Monetizing shortform videos is still a work in process. However, the platform that does it right will be able to attract the most creators and increase its revenue. The new dynamic offers platforms the chance to re-evaluate their business models and possibly secure better terms. This is because no other platform has yet found a long term solution for monetizing shortform video.
For a long time, creator agita has been simmering with shortform content. The core of the matter is how companies like TikTok or Facebook have funded shortform creators. With so-called creator funds, which are basically pools of cash that are split between creators based upon engagement and views, it’s clear that the issue is not just about the money.
“Every creator in the creator fund who thinks to themselves, ‘Wow, $1,000 a month, that’s $12,000 a year …’ That person could be a full-time creator,” VidCon founder and popular content creator Hank Green said in a widely shared video earlier this year. They could be thinking about expansion, hiring, or creating a business in their local community for their audience. This is the economic engine which drove YouTube forward [sharing revenues with creators]. TikTok is just letting it leak into their bottom line.”
Mark Rober, a YouTube creator, told reporters at a May 16 breakfast hosted by the video platform that he hadn’t really been doing shorts, preferring to focus on videos. Rober stated, “If you go to any other platform people actively push you to build a Youtube channel.” “Because that is where creators know where the real money is, where you can build businesses, real success on YouTube.”
YouTube is not immune from the shortform content trend. It recognized early that it could use its partner program to work with Shorts and could overthrow TikTok’s dominance of shortform content creators and creators. “The Shorts fund was always temporary. What we wanted to do is learn about this pretty different ecosystem, and we wanted to reward creators while they’re participating in it,” Tara Walpert Levy, YouTube’s vp of the Americas, said Sept. 20 as the company announced its new Shorts revenue model. “Funds have limits, like a cap. We felt it was crucial to bring real revenue sharing into Shorts. It offers equal-opportunity accessibility to all creators and ensures that you all continue to grow as the platform grows and our community grows.”
The changing economics are also a matter of concern. YouTube alone brought in nearly $29 billion in global advertising revenue last year, with Facebook, TikTok, Snapchat and other platforms contributing billions more from creator-driven content. But according to Insider Intelligence, TikTok could surpass YouTube in U.S. ad revenue by 2024, when the platform is estimated to net $11. 01 billion in ad revenue, over YouTube’s $10. 71 billion. It could lead to a paradigm shift in ad-supported streaming video, with the U.S. being world’s largest advertising market.
TikTok put pressure on its competitors earlier this year when it announced plans to create an ad model. However, it has not yet disclosed the revenue split with creators. YouTube’s Sept. 20 announcement allowed the company to beat TikTok to the punch and, in the process, set the standard for a revenue split that favors YouTube — all while packaged as a major win for shortform creators. “Whether they’re going to be the next big thing or just need help paying the bills to make a better life for themselves, for their families and for their communities, we want YouTube to be the place that gives them the greatest support within the changing digital landscape today,” said Neal Mohan, YouTube’s chief product officer, at the Sept. 20 event.
However, the current situation can be traced back to TikTok. In a February 3 earnings call, Meta CEO Mark Zuckerberg warned investors that there was a bigger competitor in TikTok. “It will take some time to compound and catch-up there,” he said. The company launched a dramatic redesign of Instagram, which made it more like TikTok and placed a lot of emphasis on video. The company had to reverse some of the changes a week later due to user dissatisfaction.
Instagram and YouTube are both focused on the future and have big ideas about how that future might look. “We believe the next wave of the creator economy — and we will also have to persuade Mark [Rober] on this, clearly — is about the multiformat creator,” YouTube’s Walpert Levy said at the May 16 event. YouTube’s future will include podcasts, shorts, and other content, no matter what YouTube was or is now. The problem is that the monetization structure may not be as friendly to creators as it was in the past.
This story appeared in the Sept. 27 issue of The Hollywood Reporter magazine. Click here to subscribe.