YouTube officially takes on Twitch with wider rollout of $5 channel memberships, badges and emotes

Ross Miller / Polygon

YouTube creators want to get paid and, after dealing with demonetization problems for close to two years, YouTube is finally coming up with alternative payment methods.

YouTube is introducing a couple of new alternative payment methods for creators, including a $4.99 channel membership that gives subscribers exclusive content, subscriber badges and special emojis (or emotes, as they’re known on Twitch) that people can use. The similarities between YouTube’s new top-tier service and Twitch’s basic subscription model are impossible to ignore, but Rohit Dhawan, YouTube’s senior director of product management at YouTube, didn’t acknowledge the similarities in an interview with Polygon.

“We really spent a lot of times with creators,” Dhawan said. “These last two years, it’s been a ton of conversations with small and large creators. All my inspiration is going to come from what they have said they would like this product to kind of be. The thing that I think that makes us distinct is how incredibly customizable this is. The perks that the creator comes up with is a blank slate. We just listened to our creators and viewers, and this is what they thought would actually help them the most. That’s really where the inspirations come from.”

Top chat for travel vloggers, Simon and Martina
YouTube

Here’s how it works. Creators with more than 100,000 subscribers who belong to YouTube’s Partner Program can charge a monthly recurring fee of $4.99 that gives viewers the ability to sport tier badges, “Members-only posts in the Community tab and access to unique custom perks offered by creators, such as exclusive live streams, extra videos, or shoutouts,” according to a press release. Again, Twitch and Patreon’s models come to mind here. Hypothetically, if creators want to debut a new video for subscribers before releasing it to the general public, that’s something the new channel membership could provide.

YouTube’s alternative monetization strategy — a system that doesn’t rely on ads — is a direct response to demonetization concerns the creator community has raised for two years. Channel subscriptions seem like a direct response to numerous top creators, including Casey Neistat, publicly declaring Twitch the better alternative to YouTube when it comes to securing revenue. Dhawan said he started working on alternative monetization strategies more than two years ago, adding that his boss, Neal Mohan, senior vice president of product, and CEO Susan Wojcicki, really wanted to focus on different methods to help creators get paid.

“I’ve been working on it for a long time,” Dhawan said. “We’ve been testing these features and they’ve reached a certain level of success, so it’s very much inspired by the fact that it was just a great opportunity to help creators make more money.”

People can look at YouTube’s new offering a few different ways. Building Twitch and Patreon-like tools right into the platform is an easy way to get people to stay on YouTube. They don’t need to go to Twitch to earn the $4.99 monthly subscription, and they can use that subscription model to offer Patreon-like perks. Dhawan said the team isn’t trying to do that, adding there’s a thousand ways to look at any particular thing.

“I can tell you that as a leader of this thing, it’s 100 percent inspired by what’s the best thing we can do for creators and viewers,” Dhawan said. “That is the sole motivation.”

Well, maybe. YouTube will get a cut of the $4.99 subscription fee. Dhawan didn’t say how much of a cut YouTube gets from the fee, but Polygon has reached out to YouTube for a specific number. Most Twitch streamers earn 50 percent of the $4.99 subscription fee, which is a tantalizing offer for many people. Like Twitch, YouTube is a business, so it makes sense that it would collect a partial fee for providing a service.

Creators who are able to use that service right now is still slightly limited. They must have 100,000 subscribers (the line between small YouTuber and creator-on-the-rise who could benefit from memberships) and be in the Partner Program. If a creator does anything in bad faith, and their Partner Program status is put in jeopardy, they can also lose these privileges. Dhawan didn’t suggest when channel memberships will role out to other, smaller creators.

Channel memberships, which the company has already tested with some creators like comedian Mike Falzone and travel vloggers Simon and Martina as “Sponsorships,” will roll out to qualified creators in the coming weeks.

Update (June 22): YouTube will take 30 percent of creators’ channel membership revenue, giving creators 70 percent of the $4.99 price tag. That’s more than Twitch’s current 50 percent split between creators and the company for its own $4.99 tag. It’s also less than Patreon’s offering, which takes five percent of processed fees from creator subscriptions.

“Creators receive 70% of sponsorships revenue after local sales tax is deducted,” according to YouTube’s website. “All transaction costs (including credit card fees) are currently covered by YouTube.”

Update 2 (June 22): Patreon’s vice president of product, Wyatt Jenkins, issued a statement to Polygon about the new changes coming to YouTube’s channel membership. The program, which allows creators to produce exclusive content for subscribers — much like Patreon — was called out by other publications as following a similar business model.

“We’re super excited that YouTube is focusing on membership, this is something that we’ve been doing for a while,” Jenkins said. “It’s going to grow the knowledge of the market behind membership. We think we’re at the tip of the iceberg. I think there’s going to be a bunch of folks who think, ‘Oh great, YouTube has membership’ and a bunch of other people who say, ‘I want my membership in one place and my ad-driven money in another place.’ For us, it grows knowledge of the market, and I think it’s going to grow a whole set of YouTubers who have multiple revenue streams so they feel safe.”

Comments

"We’re not reacting to Twitch, nosiree. It’s just a total coincidence that the only stuff we listened to creators about and implemented is a reaction to Twitch."

Is there a reason they don’t let creators just set a price, or create tiers with multiple prices? There are some channels I enjoy that I could see subscribing, since I already contribute $5/mo. to a Patreon. There are other channels that I enjoy occasional specific content, though, and I could be convinced to contribute $1 or $2, but couldn’t justify the full subscription. This model doesn’t give those levels of options the way Patreon does. I’d also wonder what amount Patreon takes. If it’s less than 50%, it’s more lucrative to use that than YouTube directly.

Agreed. A lot of the channels I follow on YouTube are smaller, niche creators who have a day job, doing the YouTube thing as a hobby, releasing a few videos a month, or animators that can’t pump out daily half-hour videos. They do their videos because it’s what they love doing and have a small, loyal fan-base of people with similar interests, and the ad revenue they were previously getting was basically beer money.

I’d be happy to "subscribe" to some of these channels with a $1-2 "tip" (and already do for a few via Patreon), but it’d be cool for YouTube to be able to offer something on a more "nano-transaction" level, where I, as a viewer could spread out a monthly tip budget of $5-10 among my 20-30 favourite creators. They’d each get 20c-50c per subscribed fan (or more for super-fans) per month, but if YouTube made it super-simple to subscribe with a pay-what-you-want model, a small channel with 1,000 paying subscribers could make a few hundred dollars a month.

Basically, not everyone wants to be a full-time professional YouTuber, but I feel every YouTube creator should be able to be rewarded for their efforts, especially if they have a small, loyal following who are willing to flip a coin into the tip-jar for each video they make, while sidestepping the de-monetisation from ad revenue issues.

Credit card fees. In the US, most major credit cards charge $0.35 or 2.9% of the purchase, whichever is larger (I think American Express charges more). On a $1 subscription, YouTube gets $0.65 and pays out $0.50 to the content creator and they pay some payment processing fee to get that money to the content creators – only 10 of that $1 sub may go to Youtube. At $5, YouTube gets $4.65 and pays out $2.50 to the content creator (~35% of your sub to YouTube). They’re much more interested in a 35% ROI than a 10% ROI.

Patreon gets around this by charging your credit card once for all of your pledges and distributing their funds to the creators in a bundle. If you make 5 $1 Patreon pledges, Patreon receives $4.65 and probably pays out something like $0.60 of each of those pledges go to the creator. ~25-30% of your pledges go to Patreon – much higher than YouTube’s theoretical 10% ROI on a $1 subscription.

But why couldn’t YouTube do the same thing? You subscribe to X channels at various rates, and they charge you a lump sum each month. Nothing about what Patreon is doing would be unavailable to YouTube.

"Creators with more than 100,000 subscribers"

And again, the small niche channels (that still have good content) miss out.

Um, I’m not sure the author of this article understands math

"YouTube will take 30 percent of creators’ channel membership revenue, giving creators 70 percent of the $4.99 price tag. That’s more than Twitch’s current 50 percent split between creators and the company for its own $4.99 tag…"

I think you meant to say less – not more. Youtube takes LESS away from the creator than twitch does. Youtube gets 30% only… Twitch gets 50%. Rudimentary math here.

The "more than" refers to the "70 percent of the $4.99 price tag" which creators will receive from YouTube, rather than 50% from Twitch.

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