Maybe creator funds are bad

In the summer of 2020, TikTok set aside $200 million to pay U.S. creators in what it called a “creator fund.” This wasn’t a common practice at the time. The more seasoned platform YouTube paid creators by distributing funds through its partner program, established in 2007, which enables revenue sharing on the advertisements that play on creators’ uploads. But over the last few years, as every social media company has tried to compete with TikTok’s growing popularity, these platforms all created their own creator programs: YouTube established a $100 million creator fund for Shorts, Snapchat is offering cash prizes for submissions to Spotlight challenges and Instagram is showering Reels creators with gamified cash bonuses.

Objectively, it should be a good thing for creators when big tech companies funnel large sums of money to them, right? But, as VidCon founder/recent TikTok star/longtime YouTuber Hank Green pointed out in a recent video essay, creator funds may not be all they’re cracked up to be. It’s possible that these funds function better as a way to make the companies look good — “Hey! We’re paying independent artists!” — than they do as a way for creators to make money.

While the YouTube Partner Program distributes a percentage of ad revenue to creators, creator funds like TikTok’s pay out from a static pool of money. So, as YouTube grows, the total amount of money paid out to creators will grow — over the last three years, the platform paid creators $30 billion. (Through YouTube’s partner program, creators get 55% of the money generated through ads on their videos.) But as TikTok grows, the size of its creator fund does not.

So, Green claims, TikTok creators are making less money as a result of the platform growing — and we know it’s growing fast. Plus, you could argue that the platform is growing, in part, because users are posting good content on it. And those users don’t seem to be getting properly compensated for the value they bring to these massive tech companies.

“The Creator Fund is one of many ways that creators can make money on TikTok,” a TikTok spokesperson told TechCrunch, in response to our inquires about Green’s video and the creator fund.

They pointed to new initiatives like the TikTok Creator Marketplace, which helps brands easily connect with content creators, and last month’s launch of a feature that lets creators receive tips at any point, not just during livestreams. Of course, YouTube has monetization features like these as well.

“We continue to listen to and seek feedback from our creator community and evolve our features to improve the experience for those in the program,” TikTok told TechCrunch.

Green, who has meticulously tracked his TikTok earnings for over a year, says he used to make 5 cents per thousand views, but over the last few months, he’s made 2 cents per thousand views. He claims this is because there are more views on the platform, since it’s growing, meaning that creator payouts are shrinking.

Sure, these programs aren’t intended to fund a full-time creator’s entire business, but the payout amounts undervalue the actual contribution that creators give to social platforms. We don’t know if the creator fund is TikTok’s long-term creator monetization plan — for Instagram, YouTube and Snapchat, these funds are basically just incentives to get creators to use their platforms as much as TikTok — but the short-form video race is getting a bit exhausting for creators.

Other full-time creators back up Green’s observation. British tech YouTuber Safwan AhmedMia tweeted that he earned £112.04 (about $150) from amassing over 25 million views on TikTok since April 2021. YouTube’s top U.S. creator, MrBeast responded to the tweet saying that he made $14,910.92 for “prob over a billion views.” Their calculations are less exact than Green’s — TikTok doesn’t show you how many total views you have unless you manually count them. But by their estimations, MrBeast and AhmedMia both would be making less than two cents per thousand views.

Generally, creators make more money through brand deals than through sheer video impressions, whether they’re on YouTube, TikTok, Snapchat or wherever else. But creators still want to see payment for the value that they bring to the platforms for which they make content.

“When TikTok makes more, creators make less — the slogan writes itself,” Green said in his video. “If the fund were a percentage of revenue rather than a static pool, that would be very bad for TikTok’s bottom line […] But it would be very good for creators! TikTok can get on PRNewswire and be like, ‘over the next three years, we’re sending a billion dollars to creators,’ and that sounds like a huge amount of money, right? But they remain entirely in control of how much they pay, and as more creators join the fund, and as the app continues to succeed, creators make less money per view.”

Though we don’t know exactly how much the TikTok app itself raked in, its parent company ByteDance made $58 billion last year, which makes the $200 million creator fund — deployed almost two years ago — feel small.

Comparing TikTok and YouTube is like comparing apples and oranges, though. A 30-second TikTok will inherently pay out less than a 20-minute YouTube video. Plus, ads are served differently on these platforms — YouTube has pre-roll, mid-roll and end-roll ads, while TikTok ads appear between videos (and advertisers are getting smart, making their content look like it’s just an ordinary TikTok, iterating on the same viral trends as everyone else, until suddenly you realize the video is trying to sell you a face wash or something). But an advertisement will never play in the middle of a TikTok, offering a less intrusive user experience — but by contrast, YouTube also offers its ad-free YouTube Premium plan for $11.99/month.

TikTok could follow YouTube’s playbook, interspersing more ads to generate more revenue to fund greater creator payouts. But that would be really annoying, and it would be hard to believe that TikTok is really hurting for money. Again: ByteDance made $58 billion in 2021. TikTok’s Creator Fund is $200 million. That’s 0.3% of TikTok’s parent company’s revenue spent on its Creator Fund, which straddles multiple fiscal years.