As you all know, YouTube has updated its terms and conditions. The new YouTube Terms in 2021 is the biggest change YouTube has announced and will be effective from 1st June’21. They updated the new YouTube terms and services in the US in November 2020.
If You are a YouTube creator, you must have received an email regarding the change in YouTube terms. The new YouTube terms for creators might be a piece of bad news but may be good news for Brands and Marketers. Before I dive into the major change and its impact on Brands and Creators, let start with what are the changes in YouTube terms.
Changes in YouTube terms and conditions in 2021 explained
Let me take you through the changes made in YouTube Terms and conditions.
- Face recognition restriction or Ban against collecting data from face recognition: By this term, YouTube means the Creators need to take permission before showing anyone’s personal details in their video. However, this term was always on the list, it’s just that YouTube highlighted it this time. YouTube said “The Terms of Service already state that you cannot collect any information that might identify a person without their permission. While this has always included facial recognition information, the new Terms make that explicitly clear”
- Royalty payments and tax withholding: YouTube considered payments on YouTube to eligible creators as royalty fees and must therefore comply with US tax laws. As a result, Google is now deducting taxes from these payments as required by law.
- Creators in the US are usually not affected by this tax deduction as long as they provide Adsense with a valid tax document,” said a statement released in November by YouTube. Creators outside the United States are subject to the laws of their respective countries.
- YouTube’s right to monetize: This is perhaps the biggest change YouTube has announced in its terms and services which I will cover.
The new YouTube Terms and service update says that:
You grant to YouTube the right to monetize your Content on the Service (and such monetization may include displaying ads on or within Content or charging users a fee for access). This Agreement does not entitle you to any payments. Starting June 1, 2021, any payments you may be entitled to receive from YouTube under any other agreement between you and YouTube (including for example payments under the YouTube Partner Program, Channel memberships or Super Chat) will be treated as royalties. If required by law, Google will withhold taxes from such payments..YouTube
Why did YouTube start showing ads on new creators content?
The answer is quite simple and can be summed up in the following ways as per the New YouTube Terms:
- YouTube wants more revenue from ads by providing brands the possibility to cater to a wider audience & channels on YouTube.
- Apart from Ads, YouTube is now trying hard to pull its audience into this premium YouTube content which is without ads and more added benefits as below
- You will enjoy ad free videos and music
- Able to play video in the background even if you minimise the app or use other apps
- Able save videos for watching it offline
- Have access to YouTube Orignals
In the year 2020 quarter 3, YouTube crossed over 30 Million music and premium paid subscribers, and over 35M including those on free trialsAlphabet CEO, Sundar Pichai.
If we compare the data, by the end of 2019, YouTube had over 20 million music and premium paid subscribers. So it has added 10M over 3 quarters in 2020 that can be summed up as 1.1M subscribers per month.
Google’s YouTube is already the world’s largest online video platform. If continues growing the way it has the last several quarters, it could also match Netflix in revenues by year’s end.CNBC.COM
What is the impact of New YouTube Terms and service on YouTubers?
Every YouTuber is now scared as the new monetization terms might impact their revenue as Youtube will be showing ads on content that does not fall under the YouTube Partner Program. This is not the case, as I already mentioned earlier, YouTube is now focusing more on YouTube Premium despite more revenue on Ads from Brands. So YouTubers who are already are enrolled in the YouTube Partner Program and have a good number of subscribers with awesome watch time, should not be worried about their revenue. YouTube is anyway sharing its revenue from YouTube Premium subscription if Videos are being watched by Premium users. That means you earn from regular viewers and premium viewers as well.
YouTube Premium users won’t see ads that appear on the content they watch, regardless of whoever created that content. However, content creators will receive a portion of YouTube Premium revenue instead of ad revenue.
YouTube Premium revenue share is proportional to the watch time content creators get. For example, to subtract some completely unrealistic numbers, if YouTube Premium earning is $ 2,000 a month and your content contributed 0.1% of the total watch time, then you will earn $2. So on YouTube premium too, the watch time plays an important role.
Impact of New Youtube Terms and service on New creators
No doubt it is a bit demotivating for New content creators who are already working hard to be eligible for the YouTube Partner Program and get their channel monetized.
Firstly, YouTube will show ads on new creator’s content if their content Advertiser-friendly content guidelines. This is a piece of bad news for the new creators as YouTube will not be sharing any revenue for ads displayed on their channel as they are not eligible for YouTube Partner Program. Moreover, showing ads on their channel may impact their growth. Ads on a new channel will be quite irritating for viewers who have not subscribed to the new creator.
Ad-free videos are always an advantage, Viewers get to enjoy their videos mostly distraction-free, and the creators can focus on growth. Now that option is taken away from new creators.
However, New creators can later apply for YouTube partner program if they meet the eligibility criteria.
Non Profit Creators and Brand Channel
Not all creators want to monetize their channel, some just want their content to be ad-free and want their viewers to watch the content with no disruption, Now that option is also taken away.
Recently, India’s one of the largest YouTube content creators Mr. Sandeep Maheshwari with over 20 Millon subscribers wrote a letter to YouTube India stating his channel is not-for-profit.
In the letter, he mentioned he loves YouTube but hates ads because it distracts his audience from the point he is trying to explain. He also gave an example saying that “Would you guys agree to run ads in the middle of the presentation in your conference room? He also expressed himself by stating that if it’s partnership or dictatorship.
In the end, he has given a good and workable solution and is ready to pay for such a subscription where the members don’t have to pay for ad-free content.
Similarly, some brands do not want to show ads on their content. For eg, You have a brand and you own a YouTube channel where you sell your services by engaging your audience. Would you appreciate it if your competitor shows ads on your channel? First thing why should ads be shown? I think this is a negative point for brands trying to engage their audience on YouTube and trying to sell their service Now, ads come up and sell their own service.
Impact of New YouTube Terms on Brands or Marketers or Advertisers
With flexibility and ads appearing in all the content on YouTube, Brands or Marketers now can target more audiences with a wider selection of YouTube Channels. Based on these marketers can always refine the marketing strategies.
With the availability of more ad inventory, the cost of advertising on YouTube may go down. However, Brands or Marketers mostly target an affinity audience, which might end up showing ads on low-quality content as well. So marketers need to be careful here.
We can conclude that the most impacted group with be the new creators. The new creators will have to put extra effort to keep their audience engaged with their content, which will help them grow their channel in the long run.
Brands can make the most use of these new YouTube terms and may benefit if used strategically.
Creators with millions of subscribers need not worry as YouTube is likely to share their revenue from YouTube’s premium subscription. However, creators may earn through ads from regular users and premium subscriptions if the watch time and content are awesome.