WrapPRO Special Report: Partner incentives have helped increase ad revenue beyond $28 billion making it a dominant player within the creator industry
“Revenue sharing programs are successful, because they’re gamifying the compensation of creators,”Flynn Zaiger, CEO at digital marketing agency Online Optimism told. “By paying creators over half of the ad revenue earned from their content, YouTube helps to retain creators longer.”
Content creators are really at the heart of YouTube’s business. YouTube, a Google-owned video-hosting site, has evolved into a place where users can learn how to cook, stream curated songs, and tune in to live events. It boasts over 2 billion users worldwide and 500 hours of video. Every minute an upload. This is equivalent to watching a billion YouTube videos every day worldwide.
The key difference is that YouTube’s partner program is based on revenue sharing on video ads, compared to a creator fund on other platforms that has a capped amount of money to distribute. Created in 2007, YouTube’s partner program offers a 55% split in ad revenue to creators and keeps the remaining 45% — with no limit on how much a creator can earn. YouTube is celebrating its 10th anniversary. Worldwide, the number of channels earning more than $10,000 annually is up by 40%, which shows that emerging creators are joining the fray.
“YouTube has been incredible at fueling the creator economy,”Victor Potrel is VP Platform Partnerships at digital studio TheSoul Publishing. “This approach to revenue sharing has been key in positioning YouTube as the leader in the online video space.”
YouTube claimed it has paid creators More than $30 billion between 2017 and 2020 — $7.5 billion annually on average — whereas its rivals are trailing behind by investing hundreds of millions to several billion into paying creators. Snap and TikTok have creator fund programs, with 2021 payouts ranging from $250 million (Snap), to $200 million for TikTok. Facebook and Meta, parent of Instagram, have declined to give 2021 payout amounts. However it has promised to pay creators more than $1B by the end 2022.
“YouTube has a deep history of paying creators directly — at scale,”A YouTube representative said that. “Nearly 15 years ago, we launched the YouTube Partner Program, a first-of-its-kind open monetization program, where anyone who qualified could join and start making money. In fact, we share over half of the revenue generated with creators. Today, YPP continues to be one of the largest drivers of the creator economy in the world.”
Although YouTube didn’t provide an annual breakdown of payments from 2017-20 nor figures for 2021, the company appears to have injected more cash into paying creators than Facebook, Instagram, Snap and TikTok combined. Many of these players haven’t publicly shared how much they’ve paid to creators over the years, and many of their creator funds are newly launched within the last few years.
Creators on other social platforms face a disadvantage: the lower earnings as more creators join. Companies usually have fixed budgets and are often unable to pay for such programs. Now some platforms, such as Instagram TV and Snap stories, are beginning to introduce revenue-sharing options for creators as they follow in YouTube’s footsteps to attract and retain top talent.
“Every platform has their value proposition for the creator economy,”Ryan Detert is the CEO of Influential, an influencer marketing company. “YouTube has undoubtedly paid out the most money over the years from their ad-supported [program].”
YouTube is seeing the benefits of this approach. After all, if creators make more, so does YouTube — a win-win for everybody. Even after emerging from the pandemic boom through 2020, YouTube’s ad revenue has skyrocketed from some $15 billion in 2019 to more than $28 billion in 2021. Last year, YouTube/Google’s parent company, Alphabet, reported An annual revenueThe company’s cloud and web-based services drove an increase of 41% to $257 billion in revenue, which is more than double the amount achieved in 2012.
YouTube partners with creators for a longer time than its younger competitors. It is also supported by Google/Alphabet, a huge tech company. Google purchased YouTube in 2006 for $1.65billion. The company began to expand internationally, launched the app on mobile and introduced video ads. YouTube’s partner program has been instrumental in establishing YouTube as a major content platform.
“YouTube has evolved a modern approach to how they see creators… Creators are essentially businesses,”Ali Fazal is the VP of Marketing at creator management platform GRIN. “Through a lot of YouTube’s efforts, whether that be VidCon or recent perks that have been announced like profit-sharing, they have consistently made efforts to help creators grow as businesses and that’s why it’s well-known as a network where creators can make a living and build a brand.”
YouTube’s features also give creators certain advantages. Raquel Pinto is a digital PR specialist at Limelight Digital. She is also a TikTok founder. Raquel said that YouTube allows creators to get more exposure due to its search-optimized platform. YouTube is more established than other sites and its algorithm allows for better delivery of content to the intended audience.
“It very much operates as a search engine,”Pinto stated. “By optimizing your video’s title, thumbnail and description… you will be able to increase your chances of being pushed out by the platform. YouTube videos also rank on Google, which means that if you create a video that is highly valuable, you will be able to reach a top spot in Google.”
From a brand perspective, YouTube is also a resource for building businesses as there’s no limit of links in the description. YouTube allows creators to showcase themselves while short-form video content has a limited description space.
“The longevity of a YouTube video far outweighs that of an Instagram post or TikTok,”Pinto added. “Plus, given that the videos are much longer in terms of time, this gives the creator a chance to go into deeper detail about a brand’s product or service and make it resonate more with the viewers.”
This is the first part of a WrapPRO series titled Battle Over Content Creators.
Wednesday: YouTube Wins the Fight over Content Creators | Charts
Thursday: Why YouTube – With Its Deep Pockets – Isn’t the Perfect Fit for All Creators
Friday:
