🦄 vol. 33
after introducing us to the creator economy in vol. 19… and a quick relocation to google’s london hq, base (our very own youtube insider) is back to break down creator monetisation. 💸
investing in creator monetisation 🤑
There was a time when digital platforms relied on free, user-generated content to capture mass audiences. As creators have gained power in the media ecosystem (think Joe Rogan; Dave Chapelle) and competition has increased (AKA the TikTok explosion), platforms have had to up their offerings to creators in order to draw and sustain content creation, user engagement, and ultimately advertising investment for their bottom line. 👀
So how do platforms up their offerings to creators? 💰
…by creating opportunities for them to make money (duh). Creator monetisation has many forms, varies between platforms, and has progressed rapidly over the last few years as digital powerhouses fight to remain competitive and relevant to users. Allow me to attempt to review two of the most popular streams (ad revenue and creator funds) across the top 3 social apps 📱(at least amongst Gen Zs) - YouTube, Instagram and TikTok:
💸 Ad revenue is generated each and every time you’re served an ad on any one of these platforms. And while you may find ads highly annoying, someone’s got to pay the bills, right? In an ideal world, the ad revenue generated (when company X pays platform Y to serve a targeted ad) is shared between the platform and the creator / channel…
👑 YouTube: There is little doubt that YouTube’s revenue-sharing program (launched in 2007) remains unmatched in terms of a sustainable creator monetisation model. In 2021, YouTube earned $28.8 billion in ad revenue, and creators received a majority (55%) cut of this ($14.4 billion). Still complaining about the 15 second ad before you watch your favourite YouTube channel? Just get YouTube Premium ffs!
🙄 Instagram only launched its revenue-sharing in 2020 🤯 with in-stream video ads on IGTV (remember IGTV?!) It is unclear what creators were collectively paid in 2021, but with IGTV ad revenue making up less than 1% of Instagram’s $26 billion total ad revenue (quick maths = $260 million), and creators receiving a 55% share of this, it’s not difficult to conclude a figure significantly lower (coughs ~$143 million) than YouTube’s.
😔 TikTok: Unlike its rivals, doesn’t have a revenue-sharing program. This means the new generation of digital stars who draw massive audiences did not share in the $4 billion of ad revenue (forecasted to be $11 billion in 2022 - more than Twitter and SnapChat sales combined 😳) that they were instrumental to generating.
TikTok’s failure to share is not due to a lack of trying, the issue is similar to the one that led to Vine’s downfall. Simply put, short-form videos are not long enough to host in-stream ads and their algorithm makes it difficult to attribute ad revenue to specific content and creators.
As a result, TikTok relies on its Creator Fund and other monetisation alternatives to reward / incentivise creators.
💸 Funds are pools of money distributed to creators based on some form of engagement, like video views.
When TikTok announced its Creator Fund in 2020, funds were not common practice, but by the time it launched in 2021, both YouTube and Instagram had followed suit.
While funnelling millions to creators may seem a feasible option for monetisation (especially for TikTokers), funds may do more good for platform optics than creators actually earning:
TikTok’s $200 million Creator Fund may sound like a lot but in contrast to YouTube’s billion dollar creator payout, not so much. Similarly, while Meta’s $1 billion Creator Fund may boost Instagram’s total creator payout, +- $1.26 billion at best, this is still miles behind YouTube’s offering.
Additionally, while revenue sharing allows for creator earnings to grow with platform growth🤗, funds distribute money from a static pool… and therefore creator payouts shrink as the platform (volume of creators) grows 😶.
Other forms of monetisation? 🤔
Let’s be clear: creators don’t solely depend on these platforms for monetisation. Here’s a couple other ways:
📷 Brand deals (#AD) are generally transactions paid directly by brands to creators to utilise their audience and reach. There are loads of really cool platforms that connect creators and brands.
💰 Tips (no joke) are growing in popularity across content platforms. YouTube ran a few tests integrating this functionality too.
But having said that, when you get it right, it’s the revenue share that pays handsomely. Popular YouTuber, Mr Beast, reportedly earned $54 million in 2021. 🤯
Takeaways 🍔
When it comes to the platforms themselves, it’s evident that revenue-sharing (depending on the creator % share) is the fairest model for rewarding creators and is what gives YouTube its advantage in the platform monetisation space. With funds proving to be a shallow alternative in the face of rapid growth, platforms without revenue sharing, (i.e. TikTok), are challenged to either incorporate it into their models or to create new and innovative options that achieve the same in order to keep attracting creators and sustain their businesses.
Interestingly, while YouTube scrambles to scale Shorts, TikTok is heading in the other direction and meeting that challenge head on by expanding into long-form content! 🍻 Here’s to a lot more ads on your feed! 😑🤦🏾♀️
base
sash binged wecrashed - the (crazy) story behind wework
matt loved this piece that touches on skill-stacking