Skip to main content

YouTube is turning on the money hose for Shorts — and taking on TikTok for real

YouTube is turning on the money hose for Shorts — and taking on TikTok for real

/

Monetization is how YouTube wins, and YouTube knows it

Share this story

Three screenshots showing the interface of YouTube Shorts in beta. One shows a video, another shows a carousel of videos on the YouTube app’s main screen, and the third shows a grid of videos using the same sound.
YouTube Shorts is taking on TikTok with one big move: money.
Image: YouTube

In its ongoing battle with TikTok for vertical video supremacy, YouTube is about to play its most valuable card. It’s getting ready to turn on aggressive monetization for Shorts, its shortform vertical video format, and promising to help millions of creators make money on the platform.

Starting early next year, Shorts will be part of the YouTube Partner Program, meaning those who qualify can start getting a share of the ad money generated in Shorts. YouTube is also making it easier for creators who don’t qualify for the program to make money through tips, subscriptions, and merch sales. (The New York Times first reported the news.) The goal is to offer more and better monetization options than TikTok and potentially win over (and win back) many of the creators flocking to the rival platform.

The announcement comes about 18 months after the original launch of Shorts and a year after YouTube’s chief product officer Neal Mohan promised a “long-term monetization project.” Shorts appears to be growing fast: Amjad Hanif, YouTube’s vice president of creator products, says the feature is seeing 30 billion views a day and 1.5 billion people are viewing them every month. Shorts can often still feel like a TikTok clone, though, and it certainly hasn’t hit TikTok’s level of cultural cachet. But what TikTok drives in culture, YouTube drives in revenue.

Until now, YouTube has monetized Shorts in small ways, through creator funds, shopping, and tips. Those are similar to the ways TikTok and Instagram monetize their own vertical video, and many creators feel they’re not enough. Hank Green summed creator funds up pretty well to The Verge’s Nilay Patel on the Decoder podcast: “I hate them.”

What Green and others want is the standard YouTube model in which YouTube keeps 45 percent of all revenue generated by creators’ videos and creators get 55 percent. That revenue share has turned YouTube into a career for lots of creators, and while YouTubers have their issues with the platform, that split has tended to work. “The moment YouTube launches its monetization product for Shorts has to be soon,” Green said.

Shorts isn’t quite getting the full YouTube deal; YouTube’s keeping more of the money

Shorts isn’t quite getting the full YouTube deal, though. The platform is flipping its percentages, keeping 55 percent of revenue for itself and giving 45 percent to creators. Hanif explains that part of that extra money will go to paying for the music used on the platform so that creators can use anything in the library without worrying about rights. Either way, YouTube thinks it’s a better deal than creators are getting just about anywhere else.

YouTube’s also trying to make it easier for creators to monetize on the platform, especially those who haven’t yet hit the bar — 1,000 subscribers, and either 10 million Shorts views in the last 90 days or 4,000 longform watch hours overall — to get into its Partner Program. The company is introducing a new tier through which creators can get to features like the Super Thanks tipping option and paid channel memberships without being part of the ad program. Hanif won’t say the exact requirements for that tier except that it would be much lower than the existing ones. “And so, a lot of creators earlier in their careers who have taken a little bit longer to join the program will be able to join much earlier,” he says, “and start getting a paycheck much sooner than they were in the past.”

With traditional YouTube videos — what Hanif calls “longform YouTube” — the ad model is fairly straightforward. Users click on a video, they watch an ad before or during the video, and creators get a chunk of the revenue from that ad view. There’s no question of who generated that ad view or who gets the money.

The model is simple-ish: take all the videos you watch, split the ad revenue among them

With a fast-moving feed of shortform vertical video à la Shorts or TikTok, it’s vastly more complicated. If you watch one whole video, then flip through three more, then see an ad, then watch two more full videos, then close the app, who gets paid? What if one of those videos is a duet or a remix of another video? What if they’re all challenges set to the same song?

Many of those details aren’t yet figured out, which is why the Shorts Partner Program isn’t launching until next year. But Hanif describes the rough plan this way: if you open Shorts, watch six videos, see two ads, and leave the app, YouTube will take the ad revenue from those two ads and split them among the six videos.

“Probably the biggest difference you’ll see from other products in our longform,” Hanif continues, “is sometimes watch time played a big role.” That’s one reason you’ve started to see YouTube videos getting longer over time. “But in the case of short format, where you’re talking under 60 seconds, it’s a really a view that is the criterion that matters.”

Shorts is all about views, not watch time (but that’s complicated, too)

But that brings up another question: what’s a view? YouTube doesn’t like to define the word publicly, and Hanif would say only that “it’s a few seconds — we don’t count it right when it shows up.” Advertisers want to know what users actually watch, he says, and so do creators.

What this all means, in practice, is that Shorts will likely be less lucrative to the most popular channels, who will now have to share revenue with everything else in the feed but will allow more people to make money. That seems to be exactly YouTube’s goal: Hanif says YouTube has about 2 million monetizing creators right now, and he expects that number to be closer to 3 million by the end of 2023. One way TikTok has succeeded is by relentlessly promoting new creators to its audience, and YouTube seems to want to do the same.

YouTube says it has paid creators more than $50 billion over the last three years. Building Shorts into a meaningful part of that will take time. “Our ad sales team has been working with lots of advertisers on it,” Hanif says, “and it will take a while to build it up to the business we’ve had in longform.” YouTube’s also still sorting out how, exactly, to talk to creators about making use of all the tools — longform, live, Shorts, and everything else — on the platform.

But he keeps returning to the same point: “It’s really the first platform at scale that is going to share revenue with shortform creators where they can actually expect a paycheck and earn money.” There are lots of details left to deal with, but YouTube’s betting that paycheck will be enough to keep people around while it figures them out.

Correction September 16th, 9:45AM ET: This story initially flipped YouTube’s payout ratio in one instance. YouTube traditionally keeps 45 percent and gives 55 percent to creators; the ratio is flipped for Shorts.

Today’s Storystream

Feed refreshed 28 minutes ago Midjourneys

A
Youtube
Alex Cranz28 minutes ago
After DART smashed into Dimorphos, I can’t stop thinking about the best “blow up an asteroid” story.

LucasArts and Steven Spielberg came up with The Dig, a game about an astronaut, scientist, and journalist blowing up an asteroid and finding a spaceship inside, and they did it years before Bruce Willis, or NASA. You can still buy and play it on Steam!


R
Instagram
Richard Lawler40 minutes ago
Everything looks better in slow motion.

Apple’s Dynamic Island alert system isn’t sitting still around your iPhone 14’s front-facing camera array. We’ve been enjoying its contextual animations — and even an Android copycat — since it was unveiled, but take a look at it here, captured at 240fps, to see exactly how iOS applies animations that make it feel a bit more lively.


R
External Link
Russell BrandomTwo hours ago
Oracle will pay $23 million to settle foreign bribery charges.

The SEC alleges that Oracle used a slush fund to bribe officials in India, Turkey and the United Arab Emirates.

This behavior is sadly common among software companies doing business overseas, and it’s not unique to Oracle. In March, a former Microsoft executive claimed the company spent as much as $200 million a year in bribes for foreign officials.


Asian America learns how to hit back

The desperate, confused, righteous campaign to stop Asian hate

Esther WangSep 26
E
External Link
Emma Roth3:16 PM UTC
Celsius’ CEO is out.

Alex Mashinsky, the head of the bankrupt crypto lending firm Celsius, announced his resignation today, but not after patting himself on the back for working “tirelessly to help the company.”

In Mashinsky’s eyes, I guess that means designing “Unbankrupt yourself” t-shirts on Cafepress and then selling them to a user base that just had their funds vaporized.

At least customers of the embattled Voyager Digital crypto firm are in slightly better shape, as the Sam Bankman-Fried-owned FTX just bought out the company’s assets.


M
Twitter
Mary Beth Griggs2:46 PM UTC
NASA’s SLS rocket is secure as Hurricane Ian barrels towards Florida.

The rocket — and the Orion spacecraft on top — are now back inside the massive Vehicle Assembly Building. Facing menacing forecasts, NASA decided to roll it away from the launchpad yesterday.


A
External Link
Andrew J. Hawkins1:30 PM UTC
Harley-Davidson’s electric motorcycle brand is about to go public via SPAC

LiveWire has completed its merger with a blank-check company and will make its debut on the New York Stock Exchange today. Harley-Davison CEO Jochen Zeitz called it “a proud and exciting milestone for LiveWire towards its ambition to become the most desirable electric motorcycle brand in the world.” Hopefully it also manages to avoid the cash crunch of other EV SPACs, like Canoo, Arrival, Faraday Future, and Lordstown.


A
The Verge
Andrew Webster1:06 PM UTC
“There’s an endless array of drama going on surrounding Twitch right now.”

That’s Ryan Morrison, CEO of Evolved Talent Agency, which represents some of the biggest streamers around. And he’s right — as you can read in this investigation from my colleague Ash Parrish, who looked into just what’s going on with Amazon’s livestreaming service.


R
The Verge
Richard Lawler12:59 PM UTC
Green light.

NASA’s spacecraft crashed, and everyone is very happy about it.

Otherwise, Mitchell Clark is kicking off the day with a deeper look at Dish Network’s definitely-real 5G wireless service , and Walmart’s metaverse vision in Roblox is not looking good at all.


J
External Link
Jess Weatherbed11:49 AM UTC
Won’t anyone think of the billionaires?

Forbes reports that rising inflation and falling stock prices have collectively cost members of the Forbes 400 US rich list $500 billion in 2022 with tech tycoons suffering the biggest losses.

Jeff Bezos (worth $151 billion) lost $50 billion, Google’s Larry Page and Sergey Brin (worth a collective $182b) lost almost $60b, Mark Zuckerberg (worth $57.7b) lost $76.8b, and Twitter co-founder Jack Dorsey (worth $4.5b) lost $10.4b. Former Microsoft CEO Steve Ballmer (worth $83b) lost $13.5b while his ex-boss Bill Gates (worth $106b) lost $28b, albeit $20b of that via charity donations.


T
Thomas Ricker6:45 AM UTC
Check out this delightful DART Easter egg.

Just Google for “NASA DART.” You’re welcome.