What started as a defensive me-too measure is now responsible for losses
- Insider sources suggest YouTube’s ad revenue from long-form videos is being affected by the popularity of Shorts, which require less viewer attention and time commitment.
- Creators find Shorts more relatable and engaging for the audience, and the mobile-first design contributes to their popularity. Viewers also find Shorts easier to watch in quick bursts.
- YouTube’s ad revenue split between regular videos and Shorts favors creators of long-form content, but the company must do more to protect ad revenue from the latter.
TikTok was one of the first apps to popularize short video content, and it quickly spawned similar video content on other established platforms, including YouTube. There’s no question YouTube is one of the best entertainment apps out there, but a report based on insider information suggests management is worried short-form video on YouTube Shorts is now eclipsing the long-form content YouTube thrived on for years, affecting the company’s bottom line.
In interactions with unnamed senior management and people familiar with YouTube’s business, the Financial Times gleaned that YouTube’s cash cow, ad revenue earning on long form video, is suffering because of the popularity of Shorts (via The Verge). For the last three quarters, YouTube has recorded lower earnings than the same time last year. Internal metrics point to the lack of interest from viewers, and brands favoring partnerships for Shorts content.
One could attribute the lack of viewer interest in conventional videos to how easy it is to consume Shorts. They require shorter bursts of attention and a lower time commitment per video. Creators told FT Shorts are more relatable to the audience as well, which helps engagement. Moreover, Shorts are mobile-first by design, and smartphones with YouTube are omnipresent. Since your next Shorts clip is just a swipe away, one YouTube staffer likens conventional YouTube videos to reading a book with focus and time on hand.
Shorts was never designed to vie with regular YouTube content, and that shows in the ad revenue split — YouTube rewards creators with 55% of the ad revenue from conventional videos and a lower 45% share from Shorts. However, creators earn a lion’s share from brand deals, too, giving the brands a say in which form of content they want to promote. Also, creating longer videos is more effort-intensive for creators, requiring more time to research, record, edit, and upload.
It’s not down to just the creators and the viewers, though. YouTube itself contributed to the situation that has arisen, giving the creators all the tools necessary for making Shorts. Reportedly, less than 10% of the creators use these tools, and that’s with YouTube staff admitting to downgrading cross-posted content with TikTok branding. YouTube also tried popularizing Shorts content even on platforms where it wasn’t optimal, like your TV.
Now, the company is cognizant of these perils of Short content, but must continue supporting them to stay relevant. That said, there ought to be ways to reduce the impact on the company’s earnings, like aggressively monetizing Shorts, or spinning it into its own separate app.
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