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Concerning YouTube Monetization Updates & Terms of Service Changes

Matt Crowley - November 19, 2020

Last night (Wednesday 11/18/20), YouTube sent an email out to their users announcing updates to their Terms of Service. If your organization publishes videos to YouTube, these updates may have several negative consequences that you should be aware of.

Thankfully, YouTube sends an email to their users when they make updates to their terms of service. However, many people often do not read these emails because the changes are rarely of any consequence. For example, one prior update was to “improve readability and transparency” by making changes to the T.O.S language so that “Terms that are clearer and easier to understand with useful links to help you navigate YouTube and better understand our policies.” That is not exactly earth shattering, is it?

However, last night, YouTube announced several T.O.S. updates, and one stands out as potentially being very problematic for those who publish content to YouTube. They announced the following:

YouTube’s right to monetize: YouTube has the right to monetize all content on the platform and ads may appear on videos from channels not in the YouTube Partner Program.

This simple statement can have huge consequences if you publish videos to YouTube. They did provide additional detail in the YouTube help documentation on these updates which is even more concerning. I have included the full language of the updates at the end of this blog post, but I’ll summarize the main key points and concerns here:

  1. YouTube T.O.S. Update: “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.
    1. MoreVisibility’s Take: Starting yesterday, if you have uploaded any videos to YouTube, they will now be able to show advertisements within your videos, even if you have not opted into the YouTube Partner Program. Previously, you could try to avoid this scenario. Oh, and unless you sign up for the Partner Program, you will not receive any compensation from these ads. This could result in problematic scenarios where ads are run on your videos that you do not approve of (but will not have any say over). Worst-case scenarios could include:
      1. Ads run on your videos from organizations that do not align with your brand safety standards: YouTube has run into many issues with advertisers who do not want their ads run on unsavory YouTube channels (for good reason). The latest T.O.S. updates could result in the opposite issue with those unsavory brands running ads on your videos. If you are advertising on YouTube, you have some control over where your videos are shown. However, now, if you publish videos on YouTube, it does not appear that you will have any control over what ads are run on your videos.
      2. Competitor ads run on your videos: Imagine a potential prospect or customer is watching one of your videos, and they are interrupted with an ad from a competing product or organization. In a worst-case scenario, they could leave your video and click off to that competing organizations website. Additionally, if you are using YouTube to host videos and embed them on your website, this could potentially lead to you advertising for competitors directly on your website.
      3. Lower video engagement: We all know that certain ads can be very disruptive and abrasive. If a potential customer or prospect is watching your video and an ad appears that is abrasive, unsavory, or just too long and boring, they may leave the video. Ultimately, this could decrease engagement with and watch time of your videos.
  2. YouTube T.O.S. Update: “We also updated the Terms of Service to mention that any payments from YouTube to U.S. creators will be considered “royalties” from a U.S. tax perspective, effective today November 18, 2020. Some creators may be required to submit tax information in AdSense and may be subject to U.S. withholding taxes if required by law. U.S. creators will be generally unaffected by these withholding taxes as long as they provide valid documentation. If you have further questions, you may want to seek professional tax advice.
    1. MoreVisibility’s Take: This is likely to be less impactful, but YouTube is updating the way they handle payments for ads that appear on your channel if you are part of the partner program. As they note, if this applies to you (only if you are part of the Partner Program), it may have tax implications for you and require additional information to be provided to YouTube.

At the end of the day, it appears that YouTube needs more ad inventory that they can monetize and are pushing to great lengths to get it. With online video usage skyrocketing due to changes in online behavior related to the current pandemic, YouTube may be trying to provide additional inventory to advertisers. However, that inventory may come at the expense of your audience and potential customers or prospects (without you even opting into it).

This change is likely to result in a lot of negative sentiment and feedback to YouTube. We will keep an eye out for future changes, but whether they will modify this policy or not is yet to be seen. In the interim, we recommend:

  1. Assessing the video hosting and player solution used on your website. If you are using YouTube to embed your own videos, now is the time to start vetting options and weighing the pros and cons.
  2. Having discussions about your comfort level with the different scenarios that may present themselves regarding ads appearing on your YouTube videos.
  3. Considering the YouTube Partner Program and whether it is the right program for your organization or not.

If you have additional questions about how these updates may impact your digital marketing strategy, you can reach us at [email protected].

 

YouTube’s Full Update to their Terms of Service on 11/18/20 Regarding Monetization

New section:
Right to Monetize
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 November 18, 2020, 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.

What changed: We’ve added a new section to our Terms of Service: “Right to Monetize” containing two updates.

What this means:

  • For channels not yet in the YouTube Partner Program:We added this new section to let you know that, starting today we’ll begin slowly rolling out ads on a limited number of videos from channels not in YPP. This means as a creator that’s not in YPP, you may see ads on some of your videos. Since you’re not currently in YPP, you won’t receive a share of the revenue from these ads, though you’ll still have the opportunity to apply for YPP as you normally would once you meet the eligibility requirements. You can always check your progress toward eligibility on the monetization tab in YouTube Studio.
  • For monetizing creators in the U.S.:We also updated the Terms of Service to mention that any payments from YouTube to U.S. creators will be considered “royalties” from a U.S. tax perspective, effective today November 18, 2020. Some creators may be required to submit tax information in AdSense and may be subject to U.S. withholding taxes if required by law. U.S. creators will be generally unaffected by these withholding taxes as long as they provide valid documentation. If you have further questions, you may want to seek professional tax advice.
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