As creators increasingly diversify their presence across all major social platforms, companies like YouTube and Twitch are rewriting the rules around revenue sharing and rethinking just how generous they should be with their content partners.
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.
The next day, Twitch shocked its user base with an update to its revenue-sharing model for premium creators, who have separate deal terms with the company. 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.
On its face, the changing revenue share could seem counterintuitive given the competition for talent among the 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.
The rapid rise of TikTok has forced every other social platform to pivot toward shortform video (YouTube Shorts, Facebook and Instagram Reels, Snapchat Spotlight, etc.). But the emergence of the format has also created a new opportunity: Monetizing shortform video remains a work in progress, and whichever platform gets it right could have a leg up in attracting the most creators (and, as a result, growing its revenue). At the same time, the new dynamic also gives platforms an opportunity for a do-over, potentially securing better economic terms, given that no other platform has yet found a long-term solution for monetizing shortform content.
Creator agita with shortform content has been simmering for a long time. At the heart of the matter is the way that companies like TikTok and Facebook have funded shortform creators: with so-called creator funds that are essentially pools of cash split among creators based on engagement and views.
“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 expanding, about hiring, about creating a business in their community for their audience. This is the economic engine that drove YouTube forward [sharing revenue with creators], and TikTok is just letting it leak out of the tub 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. “If you go on any other platform, people actively push always to build a YouTube channel,” Rober said. “Because that’s where creators know the actual money is, where you build businesses, real business and success on YouTube.”
YouTube is not immune to the shortform content trend, and it recognized early on that if it could harness its partner program to work for Shorts, the company could find a way to topple TikTok’s dominance over shortform content 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. “At the end of the day, funds have limitations, like a cap. And so we thought it was incredibly important to bring real revenue sharing to Shorts because it offers equal-opportunity access to all creators, and it ensures that as the platform and community grow, you all continue to grow with us.”
The changing economics are no small matter, either. 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. If that does take place (with the U.S. being the world’s largest ad market) it could be a sea change in ad-supported streaming video.
Earlier this year, TikTok also put pressure on its rival platforms when it announced plans for an ad model, but it has not disclosed what the revenue split with creators would be. 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.
But the current situation can trace its origin to TikTok. “We face a competitor in TikTok that is a lot bigger, so it will take a while to compound and catch up there,” Meta CEO Mark Zuckerberg warned investors in the company’s Feb. 3 earnings call. The company subsequently launched a dramatic redesign to Instagram that made it significantly more like TikTok, with a heavy emphasis on video. Some of the changes had to be walked back by the company a week later in response to user disaffection.
Platforms like Instagram and YouTube are focused on the future, and they have big ideas about what that future could look like. “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. In other words, whatever YouTube was before or is right now, its future will include shorts, podcasts and other types of content. The catch may be that the monetization structure, while still more favorable to creators than many competitors’ plans, may not be as friendly as it once was.
This story appeared in the Sept. 27 issue of The Hollywood Reporter magazine. Click here to subscribe.
