April 1, 2023

  • YouTube has announced the biggest change to its creator monetization plan in 15 years.
  • YouTube will share ad revenue with Shorts creators with 1,000 subscribers and 10 million views.
  • It’s a major shift, but some creators have raised concerns about funding for music labels.

In an event called “Made On YouTube” on Tuesday, the video giant issued an implicit challenge to TikTok, announcing a massive ad revenue share for short-form creators.

While YouTube is the first major platform to go beyond short-video creators’ funds — an update that many cheered — questions remain about how much money creators will take home.

That’s because YouTube uses a portion of Shorts’ total ad revenue for music licensing. The platform did not specify how much of the total revenue pool would go to music labels and declined to give Insider more information. The remainder of ad revenue — all that doesn’t fall under the label — will be split between creators (45%) and YouTube (55%).

YouTube CEO Susan Wojcicki fell ill yesterday, but updates were provided by her top lieutenants Neal Mohan, Tara Walpert Levy, Amjad Hanif and Lyor Cohen, which Mohan describes as the YouTube Partner Program (its creator monetization program) Biggest change in 15 years.

Here are three key takeaways:

1. Monetization of short films is a challenge for TikTok, but concerns remain

Starting next year, YouTube will replace the YouTube Shorts Fund and begin sharing revenue from Shorts ads with creators.

After an undisclosed sum is distributed to the music licensing company, YouTube will collect the remaining amount and split it with the creator. Creators will get 45% and YouTube will get 55%.

It would be one of the biggest shifts for a major short-video app to share ad revenue directly with creators — a challenge to rival TikTok. TikTok pays creators primarily through its creator fund and other monetization features, and has only recently ventured into sharing revenue with creators of popular videos.

But some YouTube users have expressed concern that record labels will receive an undisclosed share of ad revenue whether or not creators use the music in their short films.

“Creators don’t get 45% of the revenue generated by Shorts,” senior creator Hank Green wrote on twitter. “Creators will receive 45% of an unknown percentage of Shorts’ revenue.”

“If we make short films without music, why does the music industry depend on them to make money?” Twitter Matt Kowal, YouTube’s former creator liaison. “I don’t think Shorts is a music-centric format; most of the videos I see don’t even have music.”

YouTube declined to share with Insiders what percentage of its Shorts ad revenue goes to music licensing, and how many Shorts across the platform contain music.

2. YouTube is about to open up monetization to more creators

Previously, to qualify for the YouTube monetization program, creators needed to have 1,000 subscribers and 4,000 hours of long-form video viewing within one year of applying. Creators are now eligible for 1,000 subscribers and 10 million views on Shorts within 90 days.

“Our belief is that you should be able to make a living in any form,” said Walpert Levy. “It’s still early days for Shorts, but we’re seeing a lot of encouraging signs, whether it’s advertising interest … or brand deals or shopping.”

Also, next year, YouTube will introduce a new Partner Program tier that will lower the eligibility threshold for creators of feature-length, live and short films. Eligibility terms haven’t been disclosed, but these creators won’t be able to monetize ads; they’ll only be able to use fan-funded monetization tools like super thank you (viewer tips) and channel memberships.

All told, YouTube said it has paid more than $50 billion to 2 million creators, artists and media companies over the past three years.

3. YouTube is looking to simplify music licensing

While creators will soon be able to monetize Shorts by licensing their music under these terms, YouTube is still de-licensing long-form videos.

Starting next year, to help creators avoid copyright infringement, a new tool called Creator Music will be available in the YouTube Studio dashboard. There, creators can choose to purchase song licenses outright, or enter into revenue-sharing agreements with artists.

Creator Music is currently in beta and will launch later this fall with partners including Empire, Believe, Downtown and Merlin.

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