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Understanding Revenue Share | How 70/30 can be better than 90/10

Discussion in 'YouTube Networks, Monetization and Partnerships' started by Tarmack, Jul 25, 2013.

  1. Tarmack
    Rhetorical Porcupine
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    When being contacted, or contacting a network, if you meet their requirements you are most likely to be offered a revenue share. I don’t believe any networks offer a fixed CPM anymore. And with a revenue share there are some important questions that you need to ask the recruiter so that you understand what you’re getting.

    There are two kinds of Revenue Share. The first and least complicated is the Gross Revenue share. Second is the Net split which means there is a middleman somewhere along the way who is also getting paid. This is usually a parent network (MCN) above the sub-network that has made you an offer. We know that YouTube is going to take 45% of everyones earnings, so we can disregard that immediately. Whatever is left is the Gross earnings of the channel itself, ie the amount that is going to be split by the channel and the network. Let’s say that it’s $100, so the math is as simple as possible.

    So let’s take the Gross Revenue Share through to completion. If you have a remaining Estimated earnings of $100 and were offered a 70/30 revenue share, you will keep $70 and the network will keep $30. Simple stuff.

    Let’s take the same example, but make it a Net 90/10 split, but with the intermediary parent network taking a 25% cut first. So we start with $100 and the parent network takes $25 first. That leaves $75 to be split by you and your sub-network. In this example, 90% of the remaining $75 is $67.50 that you get to keep.

    So, you can see now how a 70/30 split can actually be better than a 90/10 split, if the 70/30 is Gross and 90/10 is Net. But the 90/10 split sounds so much better when a recruiter sends that initial message.

    ALWAYS read your contract, but also make sure you ask about this specifically. It isn’t peanuts in the long term.
     
    Entityofsin, stiflex, Mithril and 8 others like this.
  2. Michael
    I Love YTtalk
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    Great post Tarmack this has broken things down well I am sure it will help a lot of people understand their contracts more. I have stickied it :)
     
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  3. Thrashbat
    Thrashimation's Favorite Bat!
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    That is a very helpful post indeed. I always think that people need to read their contract, or better yet, have their lawyer do it. Those who sign blindly are asking for trouble.
     
    scifiriot likes this.
  4. relliK42
    I've Got It
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    Wow, thank you for enlightening me on this. If I ever go into becoming a partner with a network I'll need to read and re-read the terms/contract.
     
  5. ItsTurtleeTime
    ItsTurtleeTime
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    Really helpful post, another note make sure you contract doesn't have partner fee's seen these hidden in a few, they require another 10% to pay a manager which to me is ridiculous
     
  6. relliK42
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    Well then, my father is a lawyer, which would be a tremendous helping hand. Free legal service XD
     
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  7. Thrashbat
    Thrashimation's Favorite Bat!
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    Is he an intellectual property attorney, a contract specialist, or an entertainment lawyer? Those would be the best I imagine.
     
  8. relliK42
    I've Got It
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    He does municipal court as well as working in civil and criminal cases now, but he has worked with legal binding contracts before as well as in recent cases of his. Binding contracts and "reading between the lines" are not foreign to him.
     
  9. karlsanada10
    Monthly Video Game Giveaway on my channel now!
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    How would you know that the parent network would NOT its cut on your estimated income?
     
  10. Tarmack
    Rhetorical Porcupine
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    This should be clarified in the contract.
     

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