Long ago, in order to coax traditional media companies into hosting content on YouTube, the video site offered Big Cable a better revenue split than the one given to everyone else. This, of course, was back in a time when YouTube didn’t have as much bargaining power. Now armed with billions of views and dollars, YouTube is flipping the script.
According to Ad Age, as contracts between YouTube and traditional media companies expire, the video-sharing site is enforcing a standard 45/55 revenue split on networks like CBS and Fox. Now, TV networks will share the same deals that are given to creators and multi-channel networks like Maker or Fullscreen. Previously, the traditional media guys enjoyed revenue splits that awarded upwards of 70% of generated profits.
To make these new contracts more palatable for TV networks, YouTube is also restructuring its current ad buying/selling strategy. Per Ad Age, up until now YouTube set a minimum price for sold ads and took a standard percentage of the sales. Now, the site has lowered the flat percentage and is allowing companies to sell higher while keeping the rest of the profits made beyond YouTube’s standard rate.
This strategy will naturally benefit large networks like CBS, simply because advertisers are already comfortable working with them. Additionally, this will be favorable for networks that have developed large ad sales teams, which is something we’ve seen multiple MCNs do recently.