With both YouTube and TikTok gaining popularity, here’s why YouTube pays its creators better than TikTok.
TikTok and YouTube are two of the most used platforms for video content creators. Just after Facebook, YouTube is the second-largest social media platform with over 2.2 billion monthly active users. Each minute, more than 500 hours worth of new content is uploaded to YouTube, and users can watch a billion hours of videos every day.
TikTok, on the other hand, has become one of the fastest-growing apps in the world. It focuses on short-form content between 15 and 60 seconds long. In 2021, TikTok reached over one billion monthly active users.
The two companies use widely different approaches to paying their creators. But before we discuss the approaches, we must understand who can join such applications and earn revenues from them.
Who is eligible to earn money directly on YouTube and TikTok?
The requirements for applying to the YouTube Partnership Program (a program that allows its creators to generate revenue through advertisements) are quite simple. You need to have at least 1,000 subscribers and accumulate more than 4,000 valid public watch hours in the past year. Valid public watch hours are the total amount of hours people have spent watching your public videos. But the most important quality is that content creators need to follow all the YouTube channel monetization policies. The YouTube Partnership Program covers 102 countries/cities worldwide, so you have a sizable chance of being partnered with YouTube.
Similarly, the TikTok Creator Fund, the rewarding arm of the social media app, requires its applicants to have at least 10,000 followers and accumulate at least 100,000 views over all of their videos in the preceding month. They also need to have an account that fits with the TikTok Community Guidelines and terms of service. The TikTok Creator Fund is currently available only in the U.S., the U.K., Germany, Italy, France and Spain. So if you are not from one of the above six countries, you cannot access the TikTok Creator Fund, which puts many creators worldwide at a disadvantage.
How do YouTube and TikTok pay their creators?
Both YouTube and TikTok make money by allowing advertisements to run on their platforms. While YouTube lets its creators decide how many ads they want to include within one video, TikTok itself puts ads in-between videos. That said, YouTube and TikTok use widely different approaches to paying their creators.
YouTube adopts a split-percentage paying system, in which a percentage of the revenue earned by the advertisements in the video gets sent to the creators. YouTube gives 55% of its total ad revenue to its creators while keeping the remaining 45%. In 2021, YouTube paid more than US$15 billion to its creators altogether.
TikTok, on the other hand, uses part of its revenue to pay its creators by putting money into the Creator Fund. That pool of money is then split among all the eligible creators. In 2020, TikTok had invested US$200 million into its U.S. Creator Fund and GBP 231,000 (over US$290,000 at the time of writing this article) into its European TikTok Creator Fund.
So… whose creators earn more from the platform?
The variation in their payout models translates into a massive difference in the amount of money earned by creators from these platforms. For YouTube’s creators, gaining percentage-based revenue means that when they get more views and subscribers, their profits increase since more people can see the advertisements in their videos.
However, since TikTok’s Creator Fund is only a “static pool of money” and it is not tied to TikTok’s revenue or popularity. Therefore, as TikTok introduces more and more creators into its Creator Fund, each creator makes less and less since more people are sharing that static sum of money. As a result, as the platform becomes more successful, its creators make less due to increased competition for limited resources.
If TikTok pays its creators so little, why do so many people still prefer it over YouTube? The answer lies within other sources of revenue available to creators on TikTok.
Other sources of income for TikTok creators
It is important to consider that YouTubers and TikTok creators don’t just make money through the Partnership Program and Creator Fund alone. They have multiple ways to earn an income, like brand deals, paid product placements, sponsorships and endorsements.
YouTuber Jimmy Donaldson, or MrBeast, is currently the highest-paid YouTuber. He made over US$54 million in 2021. Jake Paul comes in second with earnings of over US$45 million. Some TikTokers have also made quite a fortune. Charli D’Amelio, in particular, is currently the highest-paid TikToker, earning around US$17.5 million in 2021. Coming in second is Addison Rae, with over US$8.5 million. But an important aspect to note is that both D’Amelio and Rae had only started their TikTok accounts in 2019, while MrBeast and Jake Paul launched their channels back in 2012 and 2013 respectively.
But recently, TikTok launched a new monetization scheme called “TikTok Pulse”, which is similar to the YouTube Partnership Program. It allows creators to run ads on the top 4% of most popular videos. The advertisement revenue will then be split 50:50 between TikTok and its creators. This will allow both TikTok and its creators to have another way of generating income.
Thanks to its skyrocketing popularity and high growth rate, TikTok creators can earn a similar amount to YouTubers in the coming years. As a result, it does not make a huge difference whether the TikTok Creator Fund pays less than the YouTube Partnership Fund as long as you have your other income sources sorted.
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