YouTube Monetisation – Will hurt creators, but is best digital ad-asset for advertisers
YouTube has updated its monetisation policy and the large creator community is not happy with it. With this, YouTube has announced its right to monetise all content on its platform. It means that channels which did not want ads on their videos and are not part of the YouTube Partner Program (YPP) will have ads served on their content anyway, however non-YouTube partner channels will not get paid for ads on their content. Any individual who has more than 1,000 subscribers and 4,000 valid public watch hours in the last 12 months can participate in YouTube Partner Programme.
“You grant YouTube the right to monetise your content on the service (and such monetisation may include displaying ads on or within content or charging users a fee for access). This agreement does not entitle you to any payments. Starting June 1, 2021, any payments you may be entitled to receive from YouTube under any other agreement between you and YouTube (including for example payments under YouTube Partner Programme, Channel memberships or Super Chat) will be treated as royalties. If required by law, Google will withhold taxes from such payments,” said the updated terms of service.
These Terms were effective in the United States from November 2020 and will be effective June 2021 onwards outside the US.
For Indian YouTubers, if the creator submits the tax information, he/she can claim benefits under a tax treaty between India and the US that reduces the tax rate to 15% of the earnings. However, if the tax info is not submitted by May 31, 2021, Google can deduct up to 24% of the total earnings as tax, the video platform stated.
Speaking about the implications of this policy updation, Sudish Balan, Chief Business Officer, Tonic Worldwide, noted, “The change in policy is not just going to affect creators who are not on the YouTube Partners Program, but it will also see a dramatic drop in revenue for creators in the YPP program. Because YouTube will prefer to exhaust their ad inventories on non-partners videos and save on commission/ royalty that they have to pay out. Non partner creators will not only not get paid, but also will not have any control over the type of ads that will be run on their content neither the duration of ads, which could lead to higher bounce rates. In hindsight, this was inevitable just like any other platform or service… If you are getting it for free, then you are the product!”
“It is a big change and not everyone is happy,” remarked Ambika Sharma, Founder & MD, Pulp Strategy, adding, “It will miff content creators, especially brands who are using free channels on YouTube. Now it seems YouTube is going to chuck in ads into their content whether they like it or not. Many content creators like artists, influencers and brands consciously choose not to put ads on their content so their fans and followers can view their content disruption free. However, now they will not have that choice. On the other hand, with advertising rates under strain YouTube has suddenly expanded its inventory and revenue. It also gives advertisers a bigger opportunity to reach their audiences.”
Chaaya Baradhwaaj, Founder & MD, BC Web Wise, felt that while more ads is not a pleasant experience, and not sharing revenue is okay for those who are not looking at YouTube for monetisation, it definitely discourages content creators. “Further, if we are not allowed to disable ads, then it affects branded content. All in all, YouTube’s new policies are not looking good for the creators, brands, or the audience.”
According to Baradhwaaj, “Possibly charging a nominal fee to any YouTube user, starting subscription, in an era where the audience is increasingly comfortable paying for OTT content, and digital payments could have been a better approach. Currently, one has to pay for YouTube Premium services, which you will not opt for since there is so much of free content. Definitely they can try to experiment in markets where paying for online content is much higher rather than the new policy that they have announced.”
On the other hand, Siddharth Devnani, Co-Founder & Director, SoCheers, said that YouTube is monetising its might. The platform provides creators with a viewer base which is unmatched. It has the most used search engine on the internet after Google. Creators moving out or considering other platforms will happen only if their earnings drop significantly. “It is unlikely to be a reason a new creator will not use YouTube. Other platforms will observe and amend their revenue sharing arrangements in due course after watching the response to this,” he felt.
Along a similar vein, Aman Swetta, Co-Founder and MD, id8 Media Solutions, remarked, “The marketing sector has gone through a transformation with choices for brand promotions.YouTube being a video-first platform enjoys an unparalleled loyalty with over 265 million active users in India. With Facebook increasing the monetising structure on their platform, YouTube’s update isn’t surprising at all. The new terms of services that the video streaming brand is introducing only reiterates the growth of the platform and its importance as a vehicle for advertisements and promotion. The new guidelines create an open forum which quadruples the scope for promotion which can help brands and companies reach a wider audience. Yet, of course, we are yet to see the effects of the new privacy law which is coming into play globally and the impact it will have on social platforms which currently are generating huge revenues from advertising and remarketing.”
On what this ove of YouTube means for the advertisers, Raghav Bagai, Co-Founder, Sociowash, said, “While the policy change may not receive a warm welcome from the creators’ community (especially the upcoming ones), it increases opportunities for an advertiser. We will now be able to target specific microchannels, brand channels, and niche channels to increase the effectiveness of the YouTube campaigns. Additionally, with the possibilities of running ads on your competition brands’ YouTube channel, this could potentially become one of the best digital ad-asset in the market.”
A fair amount of advertisers in India are already on YouTube and have been using the DV360 platform with its self-serve option for many years. Suveer Bajaj co-founder of FoxyMoron and Zoo Media said, "YouTube will now allow publisher access to even those advertisers who advertise via different platforms. Furthermore, advertisers will be presented with the opportunity to advertise on Youtube with all the controls of a single platform and be able to leverage YouTube’s audiences. This in itself, makes it revolutionary! While it may not significantly impact a lot of consumer-driven advertising in India in the short run, the opening up of new inventory by YouTube means that the long term benefits are extensive. If the platform starts putting content behind a paywall, it will impact user experience as well as advertising strategy significantly."