According to a report from Recode, Snapchat is making some major changes to the ad-revenue structure of its Discover platform. (In addition to being a place where you can see user-generated videos and pictures of what cool things your friends and favorite celebrities are doing without you, Snapchat also hosts a Discover section, where publishers can pay to share their content.) While both Snapchat and a given publisher used to be able to sell ads against a given platform’s content, Snapchat will reportedly be moving away from this model in the coming weeks. Instead, publishers will now sell their content to Snapchat for a flat rate and Snapchat will be the only party selling ads.
Sound familiar? This is, in broad strokes, the same way TV networks purchase shows — which isn’t terribly surprising, given social networks’ greed for television-ad money, and Snapchat’s recent push to become a one-stop entertainment shop and news source. (Snapchat’s homegrown politics show, “Good Luck America,” aired an episode featuring Hillary Clinton yesterday.) But TV networks aren’t airing shows alongside millions of hours of free, user-generated video that users find as, if not more, engaging as the professionally produced stuff.
Overall, it’s hard to tell what this will mean for publishers, like Hearst, that have significantly invested in Snapchat operations. On the one hand, that’s a significant revenue stream that’s suddenly been interrupted by fiat; on the other, it might be preferable to deal directly with Snapchat. The company recently relegated Discover content beneath user-generated content on the screen of the app. For publishers, this could mean getting eyes on content might become increasingly difficult, an issue that a flat licensing rate would negate.
For Snapchat, though, this is great. While this change places a cap on what publishers will be able to earn on a piece of Snapchat content, the new model opens Snapchat up to bring in some serious ad dollars in the coming months — great timing, since the company is reportedly going to announce its initial public offering in 2017.
For users, the biggest question is going to be how ads will be served on the platform going forward. As of now, users aren’t forced to watch full ads on Snapchat. When you don’t want to watch, you just tap and move past the ad after a few seconds. If the company is forcing publishers to give up their ads, is Snapchat going to force us to actually watch them, too?