YouTube: lucrative ad-sharing model puts platform ahead of rivals

Receive free Lex updates

We’ll send you a myFT Daily Digest email rounding up the latest Lex news every morning.

YouTube channels are highly prized among content creators. The online video platform has the most generous advertising revenue share policy of any social media company. Creators earn 55 per cent of ad sales generated. Creators suspended from the partner programme, like British comedian Russell Brand, have few alternatives. 

On Tuesday, YouTube announced it had removed Brand following reports of sexual assault, which it said violated its Creator Responsibility policy. His channels have not been deleted. Brand has strongly denied the allegations and said that his relationships were “always consensual”.

YouTube heavily relies on free content uploaded by popular creators. To keep them from moving elsewhere, it shares ad spend. In 2021, then chief executive Susan Wojcicki said YouTube had paid more than $30bn to creators, artists and media companies over the previous three years.

New chief Neal Mohan has not provided an update. Payments to creators are reported as part of cost of revenues, which includes other items such as data centre costs. But if the percentage of parent company Alphabet’s revenue paid out has remained the same, YouTube would have paid creators around $17bn last year.

Brand is not the first person removed from YouTube’s partner programme. It has also removed channels. Moderation decisions attract criticism. Creators, viewers and advertisers rarely agree. YouTube has erred on the side of caution. Last year it said it would not run ads on videos with profanities at the start.

Balancing viewpoints has become more fraught amid an advertising slowdown. YouTube is fighting competition from TikTok and Instagram’s short video format. In the first six months, revenues rose just 1 per cent on last year.

Revenue share generosity will continue to set it apart. Lossmaking Canadian video platform Rumble boasts that it is “immune to cancel culture”. It claims an active monthly user base of 44mn. YouTube is estimated to have more than 2.5bn. 

Listen to Lex deputy editor Elaine Moore talk to creators, companies and critics about the next era of social media in the FT’s new Tech Tonic podcast series.