Some YouTube employees believe that Shorts can undermine the advertising business of the platform
A number of senior YouTube employees have expressed concern that the Shorts platform’s short-form video format could undermine the company’s advertising business, the Financial Times reports.
Shorts have amassed more than 2 billion users since launching in 2021, according to the newspaper’s sources, but have drawn audiences away from YouTube’s traditional long-form videos. It is the format of long videos that brings the most profit from advertising.
In October, YouTube reported its first quarterly decline in ad revenue since 2020. In the next two quarters, the platform announced a further drop in revenue compared to the same periods of previous years.
In July, YouTube reported that ad sales rose 4.4% to $7.7 billion in the second quarter of 2023. That compares with 13% of Google’s ad revenue.
Company officials said content creators are producing fewer long-form videos due to a lack of consumer demand and commissions from brands that prefer short videos for product placement. One of the company’s employees compared the trend to reduce watching long videos to reading books – both processes require more time and attention.
Company management said Shorts were designed to complement the platform, not to compete with other formats by creators on the platform. YouTube has tried to attract new creators with more lucrative payment mechanisms than TikTok.
The service also offers editing tools within the platform. However, less than 10% of creators use YouTube’s editing capabilities in the app for short videos, according to one FT interviewee. In addition, the platform also downgrades videos published under the TikTok brand.
YouTube has a revenue sharing model with creators — creators of short and long videos receive 45% and 55%. However, the bulk of most creators’ income comes from deals with brands that sell ads in the video.