The biggest open secret in short form video has nothing to do with the algorithm. The secret is that you can’t get rich on TikTok, because even the most viral creators earn a negligible portion of their income from the platform itself.

TikTok remains hugely dominant over the copycat short form video feeds that competing social media giants have spun up in recent years, like Instagram Reels and Snapchat Spotlight. But, according to reports from the New York Times, YouTube Shorts is gearing up to announce an ad revenue sharing model that could revolutionize short form video and give TikTok a run for its money -- literally.

Revenue sharing is in, Creator Funds are out

YouTube was arguably the first platform that made it possible for creative people to earn a living by posting interesting content on the internet. In 2007, only three years after YouTube was founded, the platform unveiled its Partner Program, offering creators 55% of the revenue earned from advertisements served before or during their videos.

But TikTok pays creators through its Creator Fund, a pool of $200 million unveiled in summer 2020. At the time, TikTok said it planned to expand that pool to $1 billion in the U.S. over the next three years, and double that internationally.

That might sound like a lot of money, but by comparison, YouTube paid creators over $30 billion in ad revenue over the last three years.

A big reason why TikTok and other short form video apps haven't unveiled a similar revenue sharing program yet is because it's trickier to figure out how to fairly split ad revenue on an algorithmically-generated feed of short videos. You can't embed an ad in the middle of a video — imagine watching a 30 second video with an 8 second ad in the middle — but if you place ads between two videos, who would get the revenue share? The creator whose video appeared directly before or after it? Or, would a creator whose video you watched earlier in the feed deserve a cut too, since their content encouraged you to keep scrolling?