YouTube is moving all of its content partners to the standard 55-45 advertising revenue share — eliminating more favorable revenue-sharing terms that some media companies enjoyed under previous deals, according to industry sources.
But at the same time, the Google-owned video site will give partners 100% of the revenue for ad inventory they sell that exceeds YouTube’s rate card. That means all partners now will get 55% of ad revenue up to that CPM (cost per thousand impressions) threshold, with everything above that returning to the content owner.
YouTube’s CPMs range from $18-$24 depending on the format and level of targeting, according to a source familiar with the site’s deal terms.
YouTube is aiming to have the system fully implemented by Jan. 1, sources said. It began informing some partners of the rev-share change as far back as six months ago and began instituting the new terms a few weeks ago.
A YouTube rep declined to comment. The site’s new rev-share terms were first reported by AdAge.
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Some of the previous deals with TV networks and studios that granted them up to 70% of ad revenue are up to five years old, according to a source familiar with YouTube’s policies. The vidsite is unifying the rev-share terms to level the playing field for all partners, according to the source.
Many YouTube partners have griped that the 55-45 rev share is too low. One YouTube partner, who works with several premium TV brands, called the new model “an unbelievably elegant solution to the criticism that they’ve received about the 55-45 split.”
“Really what it does is solve issues for premium media companies,” the exec said, who requested anonymity because the terms of YouTube’s agreements are confidential. “This is a big evolution in terms of providing an incentive to attract premium content to the platform.”
However, an executive with a large YouTube multichannel network company complained that the new rev-share terms still aren’t enough because the YouTube rate card is relatively high. “The split should be 70-30,” said the exec.
Traditional VOD distribution deals such as those with Apple’s iTunes give 70% to the content owner. But YouTube has argued that it operates a very different business, spending millions on servers, bandwidth, localization and other infrastructure to keep the site running.
Another factor is that the majority of YouTube’s user-generated content does not have advertising, so YouTube must recoup its costs from content that it can monetize.
The change in ad revenue-sharing is separate from YouTube’s transactional deals with content companies (such as for movie rentals).