YouTube challenges TikTok to give shorts makers 45% of ad sales

LOS ANGELES, Sept. 20 (Reuters) – YouTube has unveiled a new way for creators to monetize short videos as it faces increasing competition from TikTok.

Google’s streaming service (GOOGL.O) announced Tuesday that it would introduce ads on its Shorts video feature and give creators 45% of its revenue. That compares to the standard 55% distribution for videos outside of Shorts and TikTok’s $1 billion fund for paying creators.

Hairstylist turned YouTube creator Kris Collins, who goes beyond Kallmekris, praised YouTube for monetizing Shorts.

“Other platforms are focused on giving people their 15 seconds of fame, which is great,” she said. “But YouTube takes a different approach. They help creators create things in multiple formats.”

The internet’s dominant video site is struggling to compete with TikTok, the app that started hosting lip-sync and dance videos and has since grown to 1 billion monthly users.

YouTube responded at the end of 2020 with Shorts, minute-long videos that attract more than 1.5 billion monthly viewers.

In April, YouTube created a $100 million fund to entice creators to create bite-sized videos to retain talent. The new revenue-sharing plan, first reported by the New York Times, aims to be a bigger and more sustainable lure than the fund and something TikTok has yet to emulate.

YouTube shares a smaller portion of its revenue with Shorts creators to offset the significant investment in the feature’s development, Vice President Tara Walpert Levy said.

Google generated $14.2 billion in YouTube ad sales in the first half of this year, up 9% from the same period in 2021.

But the most recent quarterly ad sales reflected the slowest growth since disclosure of that data began three years ago. While global economic factors play a role, financial analysts have said TikTok is also a factor.

Reporting by Dawn Chmielewski; Additional reporting by Paresh Dave; Editing by Lisa Shumaker

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