When TikTok makes more, creators make less

“When TikTok makes more, creators make less": VidCon creator's video examines the way creators are paid on YouTube versus other platforms including TikTok

“When TikTok makes more, creators make less - the slogan writes itself” ranted YouTuber and VidCon co-creator Hank Green this week.

In an explosive 24-minute YouTube video titled: ‘So … TikTok Sucks’ Green explained that whilst TikTok is getting rich, it isn’t sharing enough of that money with the creators who made it popular. 

The nub of the creator payment issue, according to Green, lies in the way TikTok places advertisements on its platform.

Advertisements run during creator videos on YouTube. Importantly ads run between creator videos on TikTok. Green hammers this point home singling out TikTok but this advertisement arrangement is shared on most other social media platforms including Instagram and Facebook.

Static fund versus fluid percentage

Since 2007 YouTube has shared a percentage of ad revenue with creators. TikTok (but also Facebook, Instagram, Snapchat et al) has a creator pool from which to pay creators.

According to Green’s thesis, YouTube shares its commercial success with its creators on the platform. When more money is generated from ads, more money is shared with creators. In August 2021 the video platform said it has paid out more than $30 billion to creators in the past three years from ads, merchandising and other service features. 

TikTok (and others) penalise success on their platforms, according to Green. The more content uploaded to TikTok by more creators means that the financial pool has to be eeked out between more people reducing the payout pro-rata. This is because the quantum of the creator pool remains static.

Size of TikTok and Meta creator funds

In March 2021 TikTok announced it was extending its creator fund from the US to include the UK, Germany, Italy, France and Spain. Size of the European creator fund pool? $70 million (approx. £54 million). Sounds like a sizeable chunk of change until you pit that against the money made by TikTok’s owners, ByteDance. The Chinese firm’s 2020 annual gross profit rose by 93% to $19bn. 

TikTok noted it expected “the fund to rise to a total of $300 million (approx. £231 million) within three years.” However, in the same announcement it recognised that whilst the fund is expected to rise - so too are the number of countries in which creators are entitled to access the fund. 

In July 2021 Mark Zuckerberg pledged $1 billion investment in the creator community: “By the end of 2022, we plan to invest over $1 billion in programs that give you new ways to earn money for the content you create on Facebook and Instagram” ran the announcement. Notably not all of this money was set aside as a creator fund. Bonus programmes sat alongside creator-targetted initiatives such as Live Audio Rooms and Bulletin, as well as monetisation products such as Stars and affiliate. Additionally, the bonus programmes are currently invitation only. 

The Meta group of companies (Facebook at the time) generated $84 billion in advertising revenues in 2020. 

YouTube’s highest earner earned just $15k from TikTok's creator fund

Green’s video provoked a few big-name YouTubers to share what they earn from TikTok's creator fund. MrBeast was one to come forward. Last year from all his commercial endeavours he earned $54 million. According to Forbes, this is the most earned in any 12-month period by any YouTuber. The 23-year-old’s videos accumulated 10 billion YouTube views, doubling from the previous year. 

By comparison, MrBeast (real name Jimmy Donaldson) claims to have earned just $15,000 from the TikTok Creator Fund since April 2021. This is despite generating an estimated billion views plus boasting 32.6m followers on the short-form video site.

YouTube shorts fund

Of course YouTube is not immune to the Siren call of the creator fund. In May YouTube announced its $100 million fund to promote Shorts - its would-be TikTok killer short-form video feature. Creators started receiving their first payouts in August. Payouts start from $100 and are capped at $10,000, based on viewership and engagement with their Shorts videos.