February 5, 2014
Since YouTube simplified its model of ad revenue sharing by letting content producers merely click a button to opt in, it’s seen a sharp increase in the numbers of creators and content — and, subsequently, revenue. A growing number of video producers are earning their livings from the site, though many say YouTube’s substantial cut of the advertising profits makes it less lucrative than what their videos are worth and how much time is spent producing them.
According to The New York Times, YouTube is constantly creating added incentive to get their content creators to produce high-quality videos that will attract advertisers. In 2012, it gave more than 100 creators grants for about $1 million each to improve the quality of their videos. And in Los Angeles, London, Tokyo and soon New York, the company has built massive production studios for creators to use at no charge.
In 2013, YouTube earned about $5.6 billion in ad revenue — a 51 percent increase from the year prior. “It’s a lot of money,” the article says, “but it is spread so thinly among the many content providers that an increasing number are saying they aren’t so sure that the deal makes sense for them financially.”
NYT shares an opinion held by many executives at media companies: “YouTube is uploading videos so quickly that it can’t sell enough ads to fill all the potential spaces.”
The article says YouTube won’t get specific about numbers, but claims that out of the one million or so content producers that sell ads through YouTube’s partner program, thousands earn “at least six figures” in revenue. Google, meanwhile, has 12,000 ad sales employees working toward building up that platform.
“The message to aspiring video makers was clear, and seductive: Come to YouTube, attract an audience, build your brand and even make real money,” NYT says. And many do just that. But many also say YouTube takes a 45 percent cut of profits (the company wouldn’t confirm this number), which is a deep cut, especially when creators are putting money earned back into their productions.
Some producers worry about the “precipitously dropping prices that advertisers are willing to pay, the huge increases in uploaded content that has made it harder for viewers to find their work, and the escalating costs of producing higher-quality content,” notes the article.