How YouTube Shorts is leaving creators with less money and what brands can do to adapt

YouTube Shorts is coming up, well, short, for creators, who say they are earning just 2 cents, or in some cases only a penny, for every thousand views on the short-form video format. That is just a fraction of the payouts of classic YouTube videos, revealing some of the new realities about life on the platform as it transitions to the next generation of online video. See all of Ad Age's 2023 Agency A-List winners here YouTube Shorts is still relatively new, and the revenue-sharing program only started in February, giving creators a 45% split of advertising dollars. Shorts are YouTube’s reaction to the TikTok craze, with a style that reinvents a large swath of the video site, owned by Google. Shorts are a roulette wheel of content, requiring a snappier mode of production and new strategies to appeal to audiences. The ad experience is different, too—ads appear as their own Shorts, not as commercials inside videos, and they run in the feed adjacent to creator content. Shorts are challenging the very definition of what it means to be a YouTuber, according to longtime partners. “With Shorts, it’s a scroll functionality. You scroll, scroll, scroll, which is a different mentality than coming in, watching something, engaging with it, and commenting on it,” said Leslie Morgan, founder of Morganglory Consulting, who works with creators on brand deals and other parts of the business. “It’s just the scroll effect.” For Natalie Alzate, a YouTuber with 8.35 million subscribers, that “scroll effect” means her videos are exposed to a wider audience. YouTube Shorts distributes creators' content to random people, not necessarily their base of loyal supporters. As a result, Alzate needs to recalibrate her relationship with the community she has established since 2014 on her health and beauty channel. “The challenge right now with Shorts, because of how the functionality is, the short-form content isn’t being served the way the long-form is,” Morgan said. “It’s actually created this new audience, and an audience that [Alzate] was not expecting, that is catering to a different kind of community.” Jonathan Paul Lambiase and Julia Yarinsky, also known as JP and Julia from HellthyJunkFood on YouTube, are feeling the Shorts effect, too. HellthyJunkFood has more than 3 million subscribers, and Shorts are paying about a penny a view, “which is better than TikTok, but not enough to sustain [on] ad revenue alone,” the duo told Ad Age by email. HellthyJunkFood typically gets tens of thousands of views on food-hack videos that last between five and 10 minutes. Shorts, which run up to 60 seconds, tend to lead to hundreds of thousands of views, which could make it a game of quantity. “The algorithm incentivizes short content creation, but the increasing saturation in the market makes it difficult to stand out,” Lambiase and Yarinsky said. “Despite this, YouTube Shorts seems to gain more new subscribers compared to Instagram and other platforms, but the percent of views from new followers is oddly low. Therefore, one might get a boost in subscribers, but not necessarily a boost in views, which is what ultimately pays out in terms of revenue.” YouTube ‘at the zoo’ YouTube has more than 2 million partners in the creator revenue-sharing program. YouTube’s long-form videos tend to lead to longer time spent watching each video with the potential for multiple commercial breaks, and creators get 55% of the revenue. Shorts gives 45% to creators because as with TikTok, there are also music licensing costs that impact some of the revenue earned. Long-form videos are known to generate more than $2 for every thousand views, a metric known as CPM. The switch to Shorts is coming fast, generating 50 billion views a day now, compared to 30 billion views a year ago. The change to Shorts is a challenge for creators and YouTube, as viewers spend more time in the videos that make less ad money. That’s also what happened to Meta as it shifted to Reels short-form videos on Facebook and Instagram. The monetization of Reels is lower than in-feed and ads in Stories, which is another popular mobile video style. YouTube’s ad revenue dropped 8% year over year in the first quarter to $7.96 billion. Advertisers are adjusting to Shorts just like creators. The more YouTube swings in the short-form direction, the more brands must devise new ways of working with the creators. Marketers also need to learn the new practices for creating content and understand how it’s discovered. “If you’re [a creator] doing short form, how will that impact your audience,” Morgan said. “It could completely change the community that you’ve worked so hard to cultivate and build. That audience is the one that is going to purchase from you. They’re going to convert, to want to buy something that you’re selling, or something that you’re doing as a brand sponsorship.” Check out the latest Ad Age events and award programs YouTube is trying to grow Shorts while giving creators new tools for podcasting, livestreaming, shopping and other sponsorship opportunities, lending to multiple ways to show up on the platform and make money. At the same time, YouTube is competing with connected TV giants such as Amazon, Roku, Apple and Disney. YouTube is taking steps to feature more premium video programs that expand the pool of TV-like commercial breaks. For instance, last year, YouTube signed a deal with the NFL to sell subscriptions to “Sunday Ticket,” a powerhouse lineup of every out-of-market football game. YouTube has a new CEO, too, after Susan Wojcicki left last month, and Neal Mohan stepped into the role after being YouTube’s chief product officer. “Shorts are like the early days of YouTube, ‘day at the zoo’ kind of early days,” said Rene Ritchie, YouTube creator liaison, referring to the first video ever uploaded, in 2005, to YouTube. “Me at the zoo” was a 19-second video and it was filmed in front of elephants at San Diego Zoo. It’s the kind of tongue-in-cheek video that holds up in the Shorts era, but it’s a whole other style from the polished, studio-quality videos that have led to creator fortunes. With Shorts, “you can just go in and record something, put it up, people see it,” Ritchie said. “You can start figuring out what works, and it’s a really easy way to get into being a creator.” How to adapt Shorts can lend to additional revenue for established creators and start paying newcomers who never would have made money otherwise, said Ritchie, who also is a member of YouTube’s partner program. “Short-form video is a much lighter lift for me,” Ritchie said. “Making a long-form video takes days to weeks, where making a short-form video takes minutes to hours. And you can also attach multiple ads to a single long-form video where with Shorts videos, you have several Shorts and then an ad. So, you can’t really compare one-to-one with those.” There are tips creators can use to take advantage of Shorts, Ritchie said, and new tools that could help. Last month, YouTube launched “Shorts as comment replies,” which is a way to take a comment from a longer livestream, where a creator is talking with their core community, and reply to it with a Shorts video. “You can record a Short right there, and it puts a sticker for the comment on the Short,” Ritchie said. “And then people can tap that [sticker] and see the comment to go back to the original video.” Since Shorts launched in 2021, the system tended to put creators in front of random viewers, but the new features could alter the dynamic, Ritchie said. “I think streaming [live videos] really over-indexed on community, and Shorts over-indexed on discovery,” Ritchie said, “but now with the new tools, like remixing and especially reply with shorts, I think the community-building aspect with Shorts, it’s a game changer.” Pay degrade Shorts monetization is still a looming issue, though, according to Chad Wild Clay, chief creative officer and co-founder of Spy Ninjas, a collective of creators. Up until February, YouTube paid Shorts creators through a $100 million fund. For Spy Ninjas, the pay severely dipped when YouTube went from paying from the fund to sharing ad dollars, Clay said by email. “Beginning Feb. 1, my Shorts revenue dropped 99.3% compared to what my YouTube Shorts were earning in January,” Clay said. “I'm going to stick with making long-form content. If I decide to make an occasional Short, it'll be for promotional purposes.” “I've been hesitant to take time away from creating long form videos to invest in creating YouTube Shorts, mostly because of the low revenue earning potential,” Clay said. Other platforms such as Instagram and Snapchat have used creator funds to spark initial interest in their short-form video players. Instagram has Reels, and Snapchat has a Spotlight feed, which both came in 2021 as a response to TikTok. Instagram said it planned to phase out its Reels bonus program, in search of new monetization models, Insider reported last week. Snapchat has cut payments in its Spotlight program over the years, showing that the social media landscape is still trying to figure out how to compensate people and encourage creation. Ad Age Leading Women and Rising Stars Last call for the annual awards Enter here Creators with established YouTube channels should not shy away from Shorts, said Chris Wittine, a digital media agent at CAA, the talent agency. “By indexing on Shorts, creators check an additional box in the algorithm’s checklist,” Wittine said. “While the native monetization of Shorts is just beginning, its impact on the algorithm is established giving those creators who use it a real edge in finding an audience. Shorts have the potential to be a “stronger alternative to TikTok,” Wittine said. While YouTube chases Shorts, TikTok is going after longer videos. Just this week, TikTok gave creators a way to film 20-minute videos that are behind a paywall that only subscribers can watch. “I appreciate the competitive spirit of what [YouTube is] doing against TikTok,” creator consultant Morgan said. “But it’s just ironic, because now TikTok is focused on their long-form business. Everybody wants what everybody else has.”

How YouTube Shorts is leaving creators with less money and what brands can do to adapt

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