YouTube, Snap, and Meta Earnings Highlight Winners and Losers of Creator Economy

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This week, Big Tech made a showy return in Meta, YouTube, and Snap earnings calls. Two calls offered some comfort for creators seeking a sign of stability from legacy platforms like YouTube and Instagram, the latter of which has alienated some users with its flip-flopping priorities (to Reel or not to Reel?) as it competes with TikTok.

That was, of course, parent companies Alphabet and Meta’s quarterly earnings this week, where both companies—coming off months of slower growth plagued by a lackluster digital ad market—reported better-than-expected results for the second quarter that ended on June 30.

But Snapchat parent company Snap, often seen by Wall Street as the canary in the coal mine for the digital upstarts, didn’t fare as well. Despite seeing growth in its user base and nascent subscription offering, Snapchat+, Snap reported a continued drop in sales for the quarter. It offered a weak forecast for Q3, raising questions about the company’s ability to keep up with its social media peers.

As creators are simultaneously being courted and cast aside by the major social media platforms, this week’s earnings help shed light on the latest priorities for some of the biggest media companies dictating the livelihoods of millions of content creators. 

YouTube Is Targeting Users’ Phones—and Their TVs

Under new CEO Neal Mohan, YouTube has honed in on three areas of growth: Shorts, connected TV, and subscriptions. All three “grew nicely this quarter,” according to Philipp Schindler, the chief business officer for YouTube’s parent company, Alphabet, to help the video giant reverse course after three consecutive quarters of ad revenue decline.

During the second quarter, YouTube brought in $7.67 billion, up from $7.34 billion the previous year. During a call with analysts on Tuesday, Alphabet’s chief business officer Philipp Schindler highlighted the creators’ role in ensuring YouTube’s financial success. He pointed to the early success of brand advertising on Shorts and direct response campaigns contributing to the company’s advertising turnaround.

“I’ve said it before, I’ll say it again: YouTube starts with our creators, and it’s their success in our multi-format strategy that will drive YouTube’s long-term growth,” Schindler said.

YouTube’s well-established focus on creator monetization, most notably through the 55% revenue-sharing YouTube Partner Program and more recently launched Shorts 45% revenue-sharing program, helped the platform continue to attract and retain talent, despite fierce competition from cultural heavyweight TikTok. (The caveats are that the largest source of income for creators often comes from brand deals, not platforms’ ad-sharing programs, and that the distribution of this wealth is often concentrated at the top.)

Not mentioned on the call was live shopping and e-commerce, a format that has exploded overseas in markets like China but has struggled to take hold in the U.S. Though YouTube has experimented with themed live shopping events with popular creators and expanded eligibility for its YouTube Shopping affiliate program last month, company executives didn’t share any updates on that front.

Instead, Schindler said YouTube saw higher user engagement and ROI from ads viewed from Shorts (i.e., on phones) and in the living room (i.e., on TVs). As more brands buy ad slots on these formats, creators may be encouraged to tailor their content or sponsored videos further for larger screens or to include more compelling calls to action.

Meta’s Threads Strategy and Its Reels Monetization Problem

Meta, fresh off its successful launch of Threads, isn’t ready to start monetizing its nascent Twitter (or should we say, X?) competitor, even as the platform saw “unprecedented growth out of the gate,” Meta CEO Mark Zuckerberg said on Wednesday during the company’s earnings call. But if Threads continues to see incredible growth and quickly delivers on much-requested product updates, like a desktop version of the app, an Instagrammified Threads could certainly be in the near future—especially as some 3.07 billion people use one of Meta’s apps every day and 3.88 billion use them every month. (The world’s population? A cool 8 billion, the Census Bureau estimates.) 

What that will look like remains to be seen, but it’s not difficult to imagine based on the sheer number of brands taking over Threads and the examples of creator-driven subscription products seen on other social platforms.

Threads may also be easier for Meta to monetize than Reels, even as the short-form video offering has, for better and worse, become ubiquitous across Facebook and Instagram and exceeds 200 billion plays per day, according to Zuckerberg. Though most of Meta’s advertisers are buying up spots on Reels, the video format isn’t matching the revenue generated via Stories or on the feed “since people scroll more slowly through video content,” Meta’s chief financial officer Susan Li told analysts.

As for Zuckerberg’s questionable pivot toward the metaverse, the company’s AR/VR unit, Reality Labs, continues to bleed money to the tune of $3.73 billion in one quarter alone. For reference, that’s more than triple the total revenue Snap reported during its own quarterly earnings

In the immediate future, it doesn’t seem like Zuck’s metaverse will be a sustainable place for creators to make money, as Meta’s sales teams have moved away from pitching advertisers on the metaverse and have instead focused on Reels and AI tools, as The Information reported in April.

However, some of the AI tools could be chatbots used to help “people connect with the creators who they care about and [help] creators foster their communities,” Zuckberg said on the Wednesday earnings call. What that will look like remains to be seen, as the executive mentioned the tools in passing rather than as part of a formal announcement of an upcoming product launch.

Snap Earnings Catch up on the Creator Front—to a Certain Point

Snap, which has long touted its Snapchat app as a visual messaging tool between friends and family, has recently courted creators to see the platform as a place to make money. Under CEO Evan Spiegel, Snapchat has brought on “hundreds of new creators”—including LSU gymnast Olivia “Livvy” Dunne—to become Snap Stars, or members of its revenue-sharing program that allows participating creators to get a cut of mid-roll ads played between their Stories, the company said in its investor letter.

In May, Snap also launched its Snap Star Collab Studio with the creator-focused marketing and distribution companies Studio71, Beeline by Brat TV, Influential, and Whalar to help brands connect with creators for sponsored content. The tool comes behind competitors like YouTube, Meta, and TikTok, which already have their own brand marketplaces for creators.

Spiegel didn’t discuss Snapchat’s creator initiatives in his call with analysts discussing Snap earnings this quarter. He laid out plans to improve Snap’s revenue performance through diversified offerings, such as the subscription product Snapchat+, which has more than 4 million subscribers, and AI tools like the chatbot My AI.

But when asked about Snap’s strengths during the earnings call, Spiegel, in so many words, made it a point to say Snap wasn’t all about creators.

“We actually think providing this place for friends and family to communicate, it’s only become more important as more and more platforms focus on public social media style features where people feel like they have to compete for popularity, compete for likes and comments,” Spiegel said. “That’s really the key utility that Snapchat provides. So anywhere that we can play to that strength, we can really build momentum.”

What are your takes on the Meta, YouTube, and Snap earnings calls? Email [email protected] to share your thoughts.

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