Shorts risks cannibalising core YouTube business, say senior staff

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Senior staff at YouTube have expressed concern that Shorts, the Alphabet-owned company’s answer to short-form video app TikTok, risks cannibalising its core business.

Shorts has amassed more than 2bn users since its launch in 2021 but has drawn away audiences from traditional longer videos on the platform, according to multiple people familiar with the figures.

Recent YouTube strategy meetings have discussed the risk that long-form videos, which produce more revenue for the company, are “dying out” as a format, according to these people.

Consumers have turned to short-form video, a move driven by phone usage and the exponential growth of TikTok, particularly among the younger generation.

In October last year, YouTube reported its first-ever quarterly decline in ad revenue since the company started giving its performance separately in 2020. In the following two quarters, the platform reported further falls compared with the same periods the previous year.

However, in July, YouTube announced ad sales rose 4.4 per cent to $7.7bn in the second quarter. This made up around 13 per cent of Google’s ad revenue.

Despite this recent uptick, YouTube staff have expressed concern over internal company figures that suggest content creators are making fewer long-form videos — driven by a lack of consumer appetite and commissions from brands that favour short-form content for product placement.

At one meeting, a senior staff member likened the trend of fewer people watching longer videos on YouTube to how people are reading fewer books, as it requires more time and focus.

YouTube said Shorts was “designed to complement, not compete with, all the other formats creators use” on the platform, such as audio and livestreams.

“We’ve been very pleased with its initial success. This is not a zero-sum game,” it said, adding that offering different mediums created “a virtuous cycle that drives new viewers to different formats”.

Rival and older social media companies, including YouTube and Instagram owner Meta, launched their short-form offerings in 2021. Joseph Teasdale, head of tech at Enders Analysis, said that because of the threat from TikTok, YouTube was “pushing Shorts in front of its billions of users, even at the expense of ad revenue. It’s a defensive move.”

Longer videos mean more opportunities to serve advertising and have a higher click-through rate on adverts to ecommerce sites, according to people familiar with YouTube’s business.

YouTube has tried to win over new creators with payment mechanisms that are more lucrative than TikTok’s and by offering editing tools within the platform.

The video division has enlisted the help of its parent company’s AI branch, Google DeepMind, to design artificial intelligence solutions that create cost savings and performance improvements for the platform, such as faster video compression before users can post a video.

However, less than 10 per cent of creators use YouTube’s in-app editing tools for Shorts, according to one person familiar with the figures. The platform also downgrades videos that are posted with TikTok branding.

“A lot of influencers and content creators don’t have that big, wonderful personality energy that lasts for 30 minutes,” said Fumi Desalu-Vold, who has nearly 650,000 subscribers on YouTube. “But for a minute, boom, they’ve got it out. They are likeable, relatable, it’s fun.”

YouTube has a revenue share model with creators that gives 45 per cent to creators on Shorts and 55 per cent on long-form, but the bulk of income for many creators is derived from brand deals to advertise products in videos. 

“I’m doing a lot of ads for other brands that are focused on short-form content, so I can take them and post them on all these social media platforms,” said Chloë Swift, a hair stylist influencer with nearly 60,000 subscribers on YouTube. “It takes so much more time to do long-form content.”