You Tube’s Terms of Use: Playing the Brands’ Band

While the privacy policy of WhatsApp sneaks into its users’ life, YouTube’s new terms of use policy is set to burn a hole down its content creators’ pocket. Recently, YouTube has introduced its new terms of service which shall be applicable from June 1, 2021.  


These policies focus more on brands, their advertisements and also bring a change in the monetization model of the uploaded videos/ content.  


Terms of Service: What’s New?  


  1. YouTube, under the new Terms of Service, is empowered to place ads on any of the content and not just the channels under the YouTube Partner Program

    Earlier, channels which were a part of the YouTube Partner Program received Ad revenue and were able to monetize their videos. However, under the updated Terms of Services, YouTube can place ads on any of its content, even the channels which are not a part of the YouTube Partner Program, those channels, however, will not be able to monetize their content and shall not receive any ad revenue.  

  1. As per the updated Terms of Service, the payment from Youtube to Indian Creators shall now be considered as ‘royalties’ under the US Taxation Laws. The Indian creators are required to share their tax information to Google’s AdSense portal, which will allow the creators to claim tax benefits under India-US Tax Treaty, which reduces tax rate to 15% of the total earnings. However, if Creators fail to share their tax information, they may be subjected to a tax rate of 24%. 


Impact of the Policy 


“All work and no play, makes jack a dull (read poor) boysadly this is the situation of the content creators under the new terms of use policy.  


The newly introduced policy would affect both, the small content creators as well the ones who are part of YouTube Partner Programme (“YPP”). These change in terms are primarily motivated by fast growing revenue from the advertisements played along with the content.  


Any individual, who has more than 4,000 valid public watch hours and has more than 1,000 subscribers are eligible for YPP. If a content creator is a member of YPP, it makes such person eligible for a share of the ad revenueSince this criterion was not easy to meet, a large number of content creators were not enrolled for the programme. Such content creators who were not part of YouTube Partner Programme, had the freedom to choose, whether or not they want to play ads during the streaming of their videos.  


However, from June, 2021, this freedom of choice has been taken away from the small content creators, as YouTube shall now have the right to run advertisements on any of its content, even the channels which are not a part of the YouTube Partner Program. Adding to the adversity, these content creators will also not be able to monetize from such ads and the entire revenue earned out it shall be retained by YouTube.  


Further, in a situation, where any of the content creator is eligible for any payment from any programme of YouTube, like YouTube Partner Programme, Channel memberships or Super Chat, such payments would be treated as “royalties” under US Taxation LawsIf required by law, Google will withhold taxes from such payments. For the purposes of levying taxes, the content creators are required to submit their information via ad- sense portal. Providing such information, would will allow the creators to claim tax benefits under an India-US Tax Treaty, which reduces tax rate to 15% of the total earnings. However, if Creators fail to share their tax information, they may be subjected to a tax rate of 24%. The tax would primarily be applicable on Indian content creators, having viewership in USA.  


Considering the long- term effects, the creators who are a part of YPP may be affected as YouTube may prefer to run ads over the small content creators’ videosas any revenue that generates out of these would not be subject to any agreement to share.  


In general parlance, content that has no ads attracts more viewership, especially small videos, like, recipe videos or d.i.y videos, that are developed by small content creators. Therefore, the content, being ad- free, had a competitive advantage over the videos that incorporated ads.  Even though YouTube’s new policy does not cause any monetary effect on the small content creators, it is certainly going to reduce the viewership due to incorporation of ads. Since these small content creators would not have any control over the ads, the subscriber base would surely be affected. 


YouTube: An eagle that fears no adversity 


YouTube’s new policy is in complete derogation of rights of the content creators and in total favour of brands. In this new era, where OTT platforms are the new medium of entertainment, YouTube is making the most out of its viewership. The content creators, both small and big, new and existing, are not in a position to challenge this policy as even the biggest competitor of YouTube is no where near to it in terms of number of viewers.  


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