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It sounds to me from reading their material that the $500 is a suggestion, as opposed to a requirement. They probably assume that the less you charge for production, the more cash they’ll spend on ad slots. In reality, I think that mentality is off. genarally speaking, the less someone spends in the beginning indicates that they’re not going to put as much cash out over time.
I’ve produced a few commercials in my day. Some cost our clients well under $500, and some cost them well over $5000. The one thing I’ve discovered just watching TV is that I see many more of my $5000 ads on TV than my $500 ads. The people who bought the cheap ads weren’t ready to really invest in TV advertising, and so they spend as little as possible on the ad, maybe run a handful of TV spots, and give up. On the flip side, the companies who spend a sizable amount on te production of an ad usually want to see it succeed. As such, they blast that ad on virtually every moment they can.
It’s an interesting program, and I’m tempted to join if for nothing else just to add another professional association to my list, but it does seem like aside from actually putting the ads on the air, the video producer is doing all of the work, and the end royalty is pretty small. I think my YouTube Partner status earns me something better than 2.5% (not that Google would actually tell me, but still).