YouTube’s Next Move in the Race to Beat TikTok

YouTube is giving more creators more opportunities to make money in an apparent bid to compete with TikTok.

The Google-owned company announced at Tuesday’s “Made on YouTube” event that it’s lowering the bar for creators to make money on the platform by introducing revenue-sharing to Shorts, its TikTok-like video-sharing service where videos can be up to 60 seconds long. YouTube said it plans to give Shorts creators 45% of the revenue generated by the ads that play in between videos, starting in early 2023.

“Short video is clearly a really popular format. So it feels like every platform is kind of moving in the same direction,” says Mark Bergen, the author of Like, Comment, Subscribe: Inside YouTube’s Chaotic Rise to World Domination.

YouTube reportedly first announced these changes internally during an all-hands staff meeting on Sept. 15, with vice president of product management and creator products Amjad Hanif citing the development as “the largest expansion” that YouTube’s monetization program has undergone in several years. Tech industry experts say the move seems to indicate that YouTube is pushing to retain creator loyalty as Chinese-owned TikTok increases rapidly in popularity.

YouTube's Next Move in the Race to Beat TikTok

For its part, YouTube says that a monetization option for short-form content has always been part of its long-term plan. “The announcements we made today are first-of-its kind and establish a new model for the due and critical compensation for mobile-first, short-form video creators,” a YouTube spokesperson says. “This is a huge area of investment for us, and we look forward to seeing how it helps the community thrive and grow.”

Read more: Why So Many YouTube and TikTok Stars Want to Sell You a Shirt (And Maybe a Burger)

The battle against TikTok

With over two billion monthly active users, YouTube is far and away the top performing online streaming platform. But TikTok’s popularity is becoming more and more clear. TikTok’s average monthly active users increased by 234% in the second quarter of 2022 compared to the same time period in 2019, while YouTube’s grew by only 29%, according to data from app metrics platform Sensor Tower.

“What TikTok has done is sort of take YouTube’s recommendation system and Facebook’s feed features that have been criticized for prioritizing engagement and addiction, and ball it all up into a really compelling service,” Bergen says.

TikTok has also gained a serious foothold among Gen Z users. A Pew Research survey published in August found that while YouTube is still the most popular social media platform among U.S. teens, TikTok is steadily gaining ground. The survey showed that 95% of U.S. teens use YouTube and 19% are on the platform “almost constantly” as compared to the 67% who use TikTok and 16% who use it “almost constantly.”

Instagram and Snapchat are next in the rankings, with 62% and 59% of teens saying they use the platforms, respectively.

“TikTok is the platform of choice for young people,” says Margaret O’Mara, a historian of the tech industry. “And that’s the growth market that all of these platforms have been chasing.”

YouTube’s strategy echoes recent updates that Facebook and Instagram parent Meta has made to its platforms to compete with TikTok. Since introducing Reels in 2020, Instagram has touted the short-form video feature as its answer to TikTok. But the company has experienced a number of setbacks in growing the service. The Wall Street Journal reported earlier this month that, according to internal Meta research, Instagram users cumulatively spend less than one-tenth of the time per day on Reels that TikTok users spend on TikTok.

According to the Journal, part of the reason for this is that Instagram has struggled to recruit people to make content. This is the exact problem that YouTube seems to be trying to hedge its bets against.

Lowering the bar for creators to earn money on the platform is a significant move that reflects how the ecosystem of social media influencers has grown and changed, says O’Mara.

“Even ten years ago, this whole world was different and YouTube could, in a way, act like an old Hollywood movie studio and have a stable of stars that it nurtured and showcased,” she says. “Now, the new creators who seem to be getting a lot of attention and a lot of traction very quickly are on TikTok. YouTube wants to be appealing to that set of creators.”

What YouTube’s announcement means for creators

Previously, YouTube creators only made money if they had at least 1,000 subscribers and audiences watched at least 4,000 hours of their videos. Now, creators with 1,000 subscribers and 10 million Shorts views over 90 days can also cash in on their content.

During Tuesday’s event, YouTube vice president of Americas Tara Walpert Levy said the company wants YouTube to be a “one-stop shop” for creators. “Our belief is that you should be able to make a living in any format,” she said.

TikTok has introduced competition to YouTube in a way it’s never really experienced, says Bergen. “That’s forced YouTube to pay more attention and give resources to creators in a way that it hasn’t before,” he says.

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