The Rugglion Blog

YouTube made a down payment on its future Tuesday, saying it will start paying creators of short-form videos in a way similar to, though not as lucrative as, the ad-revenue shares it’s been paying creators of longer videos for more than a decade. The company also moved to simplify the antiquated, labyrinthine process of music licensing for its creators, removing a major pain point for many.

The announcements were part of a splashy Tuesday morning event at YouTube’s Los Angeles offices in the renovated former home of Howard Hughes’ massive Spruce Goose airplane. The event featured a collection of YouTube’s top executives (CEO Susan Wojcicki was ill but sent a brief introductory video) and some of its biggest stars, topped by singer Jason Derulo, who has nearly 17 million YouTube subscribers after 13 years on the platform.

The event focused on a string of announcements designed to both fend off the incursions of TikTok and reclaim YouTube’s crown as the best home for future Jason Derulos who might use it was a springboard to build their fan bases and business opportunities.

Accordingly, announcing a formal expansion of the YouTube Partner Program to include creators on YouTube Shorts, giving them a reliable revenue source in a sector that hasn’t had those, was a big deal. The expansion will launch soon in the United States, with other countries to follow next year.

“This is an incredibly meaningful moment,” Chief Product Officer Neal Mohan said. Those eligible to join the partners program through their shorts viewership will have to have recorded 10 million “valid public Shorts views in the previous 90 days.”

The company also will give up-and-coming creators whose work receives fewer views access to a set of audience engagement tools. The idea is to help them leverage their way into the full partner program more quickly, and to stick around on YouTube instead of competitors.

Executives did not disclose how many newcomers the initiatives may pull into its partners program. But executives made it clear they’re hoping the initiatives bring in a large new group of talent, while giving existing ones new ways to experiment with, say, topics different from the ones that made them famous. The bigger focus is keeping talent from straying to TikTok.

“Each format seems to serve different purposes,” said Kris Collins, a former hair stylist in the Vancouver area who turned to video creation during the pandemic as Kallmekris, and since has acquired 7.3 million YouTube subscribers. “Shorts can reach loads of people and pull them into my community, but long-form makes lots more money. That’s why this news about the partner program coming to Shorts is huge. This is a huge incentive to put all my work in one place.”

Sharing revenue is both YouTube’s most tangible response to TikTok and its most time honored tactic, going back more than a decade. The Chinese-based platform took off in the United States during the pandemic, has regularly impacted pop culture and music since, and now claims more than 1 billion users watching endless streams of video tidbits lasting 15 to 60 seconds.

In response to TikTok’s rapid rise, YouTube and Meta’s Facebook and Instagram all launched short-form platforms that have also grown quickly. YouTube said Tuesday that Shorts is receiving 30 billion views a month from 1.5 billion logged-in viewers.

For some of its biggest short-form creators, YouTube already had a Shorts Fund, a $100 million pool of revenue designed to incentivize creators to try the format in its early days.

The problem with a fund like that, however, is that “funds have limitations. I mean, they’re capped,” said Tara Walpert Levy, YouTube’s VP, Americas, in an on-stage conversation with creators Colin & Samir.

About 40% of those getting paid through the Shorts Fund had never received a check from YouTube before, Walpert Levy said. But, “it was always going to be temporary” while YouTube and its creator corps learned more about the format’s particularities.

And the shift to short is a notable one for YouTube, if not for creators who have had to become fluent on multiple platforms and formats to maximize revenue. Of Colin & Samir’s two most-watched videos, one lasted 20 seconds, the other nearly two hours, they said.

“We want YouTube to be the place that gives them the greatest support in the market today,” Mohan said. “This will give far more people a voice, which holds special meaning for all of us at YouTube.”

Advertising on short-form is different than with longer-form projects. You can’t attach a 30-second pre-roll ad to a 14-second short and expect audiences to stick around. Accordingly, the monetary structure is different too.

Instead of the 55% revenue shares that YouTube pays long-form creators for ads attached to their pieces, all short-form revenues will go into a monthly pool, with qualified creators receiving their proportionate piece of a 45% share based on views of their work.

In part, that differing payout will finance another initiative, solving one of social-media creation’s thorniest issues: navigating the arcane, antiquated system of U.S. music royalties. Securing rights to use a song often involves endless contract negotiations, lots of red lines, and costs that might literally involve signing over all revenues to the rights holder, meaning creators can’t even recoup their production costs.

The new Creator Music system will launch later this fall with a more straightforward system initially featuring pre-licensed songs from four independent labels, including from notable artists such as Derulo, Odesza and Marshmello.

Lyor Cohen, YouTube’s Global Head of Music and previously a prominent major label executive, said music from the majors likely will be added soon, including free content designed to promote up-and-coming acts. (It may help that the new CEO of Warner Music Group is Robert Kyncl, who is stepping down in a few months as YouTube’s head of business, where he spearheaded the company’s music-industry negotiations among much else).

“The music industry will access a new, hyper-engaged audience and in collaboration will unlock new revenue opportunities for all of them while connecting viewers with their favorite music,” Cohen said. “Together we’ll create the soundtrack of the new creator economy.”

Derulo called creators the new radio program directors, able to give hot songs an important spotlight as they’re coming up, but facing endless challenges in getting rights to actually use those songs in their work.

”These social-media stars have become the program directors,” Derulo said. “The people deciding the pulse of successful songs are coming up on social media. So my attention has shifted. (But) the biggest issue has always been rights. If I (as a YouTube creator) utilize this song, then I can’t monetize. That makes no sense.”

The Creator Music system will feature a batch of songs with upfront fee-based licenses, and a larger batch with revenue-sharing options. Cohen said he did not know how many songs will be included in the initial program.

“For me, this puts the power back in the hands of the creator to do what they do best,” said choreographer Ken Hanagami (Jennifer Lopez, Justin Bieber), who has 4.55 million subscribers. “It means that much more time to dedicate to what you’re creating. It’s taking away the limitations of what music I can use.”

The announcements mark a big shift in the DNA of YouTube, which debuted 17 years ago as a place where, as Wojcicki put it, “it was mostly cats on skateboards” and similar videos.

The company is now one of the world’s biggest ad-supported streaming-video services, but also has a huge presence in live-streaming. Adding short-form in a notable way to its business structure and now monetizing it with ads and revenue sharing for creators marks another significant shift in what YouTube is, but still fits into a much bigger picture, Mohan said.

“It’s something that I think about a lot,” Mohan said. “It gets to one of the core things in our product philosophy about what YouTube is. When you think about YouTube at its essence, creators are at the heart of it…We want to be the home for creators of all these formats.”