In yet another change to their business model, YouTube are updating their advertising rate card for all partners including those who have had preferential treatment in the past. From January 2014, Adage are reporting that all partners, no matter their size, subscriber base or quality of video archive will get a flat rate of 55% of ad revenue share. However, in a radical change by the site, YouTube are allowing advertising companies to keep the profits from sales made above the site’s standard rate meaning that 100% of revenue earned above the cap set by YouTube will go straight to the content owner.
YouTube, which makes its revenue from content that it can monetize, have invested a considerable amount of time and energy courting the big broadcasting networks into hosting their content on the site. Sweetheart contracts for these providers have included a much more lucrative revenue split than the one given to other partners, up to 70% in some cases. As YouTube changes the structure of their advertising package, the burden of responsibility for generating revenue falls back on the partners. However, that also opens up a massive earning opportunity for them as they are now able to sell as much as they can with YouTube capping the limit they will take. TV networks are set to reap the biggest rewards but the new system is open to multi channel networks and other major partners. Even in today’s precarious economic climate, the ability to generate 100% profit after YouTube has taken its initial slice could be a significant revenue stream for many.
This new ad structure won’t affect the overwhelming majority of monetized partners for whom YouTube have always set a minimum revenue share for the ads they sell.