Snapchat is reportedly turning toward a slightly different revenue model for its Discover platform – one where it doesn’t share revenues.
According to Recode, the social media app seems to have plans to pay content partners a flat fee for licensing the content on Discover and then keep any ad payouts for itself.
Snapchat to change Discover licensing model
Discover is a section in the messaging app, which features editorial content and daily news from publishers including Vice, CNN and ESPN. Ads on the platform were expensive to begin with at $100 per 1,000 views, but splits were available, allowing publishers to sell their own content.
Snapchat’s latest idea would mean that the company retains full control over its ad inventory.
Now, that has some positives and negatives. It guarantees that publishers are making money. However, it limits how much cash that will be.
In addition, Recode suggests that Snapchat may extend the terms to other platforms including Stories. Indeed, industry sources have confirmed that Snapchat was already in talks with publishers to inform them of the new model.
Snapchat ad revenues are predicted to reach the $1bn mark next year with Discover being the single largest contributor to that revenue. However, Stories may overtake Discover this year.
With Snapchat preparing to go public, the timing to unveil its licensing model changes is significant.
However, it raises some important questions about the power of social media platform and how that power is being used.
October 21, 2016