POV: YouTube to Monetize Shorts

Background:

YouTube has announced that Shorts, its short-form vertical video format and TikTok competitor, will soon be monetizable, promising to help millions of creators make money from content on the platform.

From early 2023, Shorts will be part of the YouTube Partner program, which means that those who qualify can start earning a share of the ad revenue generated via Shorts. The existing Partner Program requires YouTubers to have over 1,000 subscribers and at least 4,000 watch hours in the last year. Shorts creators will now be able to join the Partner Program if they have at least 10 million views over the last 90 days. For those who don’t qualify for the program, YouTube is making it easier for them to make money via tips, subscriptions and merchandise sales.

Until now, YouTube has been rewarding Shorts creators through the YouTube Shorts Fund, handing out ‘Shorts Bonuses’ to thousands of creators each month. However, YouTube Shorts Fund is a limited amount of cash and as such, pay-outs have decreased as the platform has grown. The new revenue-sharing model is intended to be a more permanent and scaleable approach.

Every month revenue from all the Shorts ads will be pooled and used to reward Shorts creators and to help cover costs of music licensing. From the overall amount generated, creators will keep 45% of the revenue, distributed based on their share of total Shorts views.

This revenue split is lower than the usual YouTube Partner Program revenue share which allocates 55% to creators. One reason for this is because it covers music licensing, vital for many shorts and will allow creators to make shorts without having to worry about licensing issues. Another reason is that ad volumes are smaller, as monetizing short-form video is often hard as you can’t add pre- and mid-roll ads onto 30 second clips, so ads for Shorts won’t be attached to specific videos, instead they will run between videos.

YouTube Chief Product Officer Neal Mohan said: “I’m proud to say that this is the first time real revenue sharing is being offered for short-form video on any platform at scale”. TikTok and other short-form video apps haven’t yet announced similar revenue-sharing programs, one reason being because it’s much more difficult to determine how to equitably split ad revenue on an algorithmically driven feed of short videos.

As YouTube puts more focus on short-form content and building its inventory of very short video ads, brands will be taking an interest, which could make it more attractive to aspiring creative talents who want to earn money for their clips.

This is also YouTube’s biggest assault on TikTok yet, as it seeks to dominate the short-form video trend and make it more lucrative for its big stars and aspiring creative talents. Creators will in general follow the money, so if they can make more money on Shorts than on TikTok, there will be more incentive for them stay or return to YouTube and make original content for the platform. The stakes have been raised, so it will be interesting to see how other platforms respond.