22/09/2020

Google reported YouTube’s earnings for the first time in a decade, and is quick to remind everyone that the “majority” of ad revenue goes to YouTubers.

Google this week revealed details about YouTubes ad revenue for the first time since it purchased the company, and the numbers are kind of staggering. The site earned just over $15 billion in ad revenue last year and itd be quick to tell you just how much of that goes back to its creators. It doesnt sound like much at least until you compare the site to social media rival Instagram.
You can read the breakdown of Googles financial results here. In addition to the $15.1 billion it earned from the ad revenue, it accrued another $3 billion in paid subscriptions, such as YouTube Premium and YouTubeTV. Ruth Porat, CFO of parent company Alphabet, said in a call to analysts (via AdAge) that We pay out a majority of our revenue to our creators. Assuming shes got right about that, that would mean the company pays around $8 billion of its money out to the people who host its lucrative ads.
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Still, as large as the YouTube ad revenue coffer is, its still eclipsed by the likes of Instagram. According to a new report from Bloomberg, the Facebook-owned app raked in $20 billion in ad revenue. Its not a direct earnings report from the company, but think about how many ads you see on Instagram on any given scroll, and tell me that number doesnt sound somewhat close to the truth. Youd hope at least some of that money
Its not every day I get to set up a head-to-head battle between two of the biggest companies over what they give back, but Im doing it now. Heres the thing about YouTube ads: most of them are tied to specific creators, and YouTube keeps 45 percent of the revenue from those ads. This is likely what Porat meant when she said YouTube gave the majority of ad revenue back to its creators.
Instagram, on the other hand, doesnt pay its creators directly. So while Instagram is making more ad revenue, its not really putting that money back into its creators. The only way Instagrammers can make money from their work is to partner with companies directly. Until very recently, Instagram didnt even offer a mechanism by which sponsors and Instagrammers could reliably track views on a sponsored post. Creators had to rely on often-sketchy third-party software. Its since redressed that somewhat via tool called the brand collab manager, but that still doesnt pay anything out to creators directly.
That said, YouTubes not perfect either: while the major creators no doubt reap the spoils of their work regularly, the middle- and lower-tier Youtubers frequently feel the sting of what they call adpocalypses. It feels like we have one of those at least once a year, and the term refers to major advertisers withdrawing from YouTube over some perceived wrong. The revenue from YouTube can dry up just as quickly as it comes, so its substantially less reliable than the rosy figure of 55 percent would make it sound.
Either way, it seems theres no great way for the average person to make money on the platform the same way the platforms are making money for themselves. Remember that every time the companies want to tell you about how much theyre doing to help their creators.