It’s no secret that YouTube has plans for subscription-based services with their previous announcements about the still-in-beta YouTube Music Key service, but Wednesday morning’s update to the YouTube Partner Terms brings us one step forward to learning how all of these services will play out for creators.
With ad-free subscriptions on the horizon for the streaming video giant, it’s important for partners to be aware of how their earnings will be impacted by viewers who may choose to buy-in, consequently resulting in less ad revenue being generated.
YouTube has always taken 45% of the gross revenue spent by advertisers, leaving creators with 55% to take for themselves. This split is published in the YouTube Partner Terms, but isn’t actually referenced anywhere else, and the earning figures you may see across the platform are from long after YouTube has taken their cut.
YouTube’s 45% cut isn’t changing with their updated terms, as much as we’d like a bigger split. The only real change comes from the addition of a “Subscription Revenues” section, as quoted below:
For those who can’t comprehend YouTube’s complicated legal jargon, the new addition means that creators will receive a portion of any paying viewer’s monthly subscription fee. That portion is dependent on the percentage of total time the viewer invests in watching a single partner’s content.
This means that if a user with an ad-free subscription is watching a lot of your videos but not many of anybody else’s, you might earn more in revenue from that viewer than you would someone else with the same subscription who only watched one of your videos but a lot of someone else’s.
While we don’t have exact specifics on how this will be calculated, we imagine it will be something like this:
A user purchases a $10 subscription at the beginning of the month.
Right off the bat, YouTube takes their split, leaving $5.50 on the table for partners to grab up in alternative revenue.
For the sake of simplicity, let’s assume the viewer only watches two channels: PewDiePie and Jenna Marbles.
During the month of their subscription, they watch 35 videos from PewDiePie and 15 videos from Jenna, for a total of 50 videos watched.
That calculates out to 70% of the subscriber’s time spent watching Pewds and 30% spent watching Jenna.
They would each share in this user’s subscription fee:
– PewDiePie would receive 70% of $5.50, or $3.85.
– Jenna would receive 30% of $5.50, or $1.65.
Again, we are simply speculating based on the information we have. There are a number of different factors that could come into play: as an example, YouTube may decide to calculate viewership percentages based on watch time instead of video views, or something entirely different altogether. This is just a simplified model.
The updated Partner Program Terms are set to take effect later this year on June 15. Google is keeping silent on their timeline for phasing YouTube Music Key out of beta or rolling out some of the other aforementioned subscription opportunities, but Bloomberg reports that a source with knowledge on the matter said they “may debut by the end of the year.”