Alphabet who own Google shared their first report of the year. Within their first quarter they’ve performed really well, this includes YouTube. Creators on YouTube earn a 55% share of revenue which comes from adverts. Companies will pay YouTube to host adverts within videos. This money is then paid out to these creatives and split accordingly. The amount you receive will be based upon a variety of things. How many views you receive, how many subscribers you have etc.
TikTok creator fund vs YouTube advert revenue
This is a typical way of paying creators. However, TikTok have gone down a different route. They have a creator fund which pays their highest performers. This fund was created in 2020 when they set aside $200 million. The issue with this method is, the money won’t last forever. TikTok need to ensure they’re earning enough themselves to replenish this pot. YouTube however, will always have the opportunity for adverts within videos. With creators knowing that’s how they earn money, they’re not going to complain about them appearing in their videos.
Alternatively though, YouTube won’t allow adverts on certain videos. The ones they feel cannot be monetised. Often these are important videos about topics which need to be spoken about. However, as they’re considered taboo or controversial, the adverts get banned. Leaving creators to find their own sponsorships. YouTube have reported that the channels within their platform have collectively increased the revenue. Those making at least $10,000 in revenue has gone up by 40%.
YouTube introduced a creator fund
YouTube mirrored TikTok’s idea we’ve previously mentioned. Their creator fund seemed to attract quite a few names. Due to this YouTube Shorts decided to make their own creator fund. They added $100 million into their pot to try and encourage the big TikTok stars to make their way over to their platform instead. There’s more to it than just copying TikTok though. They feel it will help YouTube’s revenue grow. It’s likely this thought it because, the more well known names using YouTube Shorts to collect from the creator fund, the more companies will want to advertise through YouTube Shorts.
“We are experiencing a slight headwind to revenue growth as Shorts viewership grows as a percentage of total YouTube time.”
CFO Ruth Porat
YouTube’s missed projections
Despite YouTube performing well so far, they have missed their quarterly projections when it comes to advert revenue. Expecting to bring in $7.51 billion, but, instead bringing in $6.87 billion. They missed the mark this time around, although they have still outdone last year’s first quarter. Last year they earned $6 billion within the first portion of the year. While they have still improved within the year, they haven’t reached their set goals. This is where they’re reassuring shareholders YouTube is still performing well.
It seems their predictions may have been off due to their major growth within 2021. During the first part of the previous year their income revenue had shot up by 49%. This is likely due to the pandemic. While everyone was staying home, YouTube was being used more and more. Increasing the need and wants for adverts within videos. Gaining certain YouTubers more views and therefore more earnings. It seems they took these statistics into account when predicting this year’s Q1 (first quarter) earnings. Unfortunately as the world has started to open up again, these expectations weren’t quite met.
YouTube Shorts is performing well
Sundar Pichai, the CEO of both Alphabet and Google has expressed that YouTube Shorts is doing really well. This is considered to be a similar concept to TikTok. Creators are able to upload short clips that viewers can then scroll through. The site is generating 30 billion views each day. This is 4x more than the previous year of 2021. This is really promising for those who create videos for a living. It’s reassuring to know their earnings aren’t going to deplete any time soon and the company they trust is still continuing to climb.
Their rivals over at TikTok don’t released their daily views. However, in October they were sitting on 1 billion monthly active users. So, this suggests they must be receiving views into the mid-millions each day. It’s almost impossible to watch only 1 video per day. Each time every active users clicks onto the app we’d imagine they watch at least 10 videos. This gives us an idea of just how many views they get per day.
It’s very likely there is enough room for both platforms within the industry. Creators already earning through YouTube are likely to use their Shorts platform to share videos that are less time-consuming to make and are just a light-hearted bit of fun. Whereas those who have made a name for themselves within the world of TikTok aren’t going to be easily persuaded to convert across to another platform.
