Snapchat Discover has been a hit with publishers that want access to the popular messaging app’s highly-desirable audience, and some reports even indicate that some publishers have been willing to pay Snapchat for the opportunity to be included in Discover.
Those lucky enough to be invited by Snapchat to participate in Discover have the ability to sell ads against the content they publish alongside Snapchat’s internal ad sales team. Snapchat and publishers share the revenue generated. The amount of the revenue share is said to vary from publisher to publisher, and also depends on which party sells the ads.
But the revenue sharing arrangement could soon be a thing of the past. Recode’s Peter Kafka reports that over the past several weeks, Snapchat has been looking to negotiate different terms with publishers. The new deal: no revenue share. Instead, Snapchat will pay publishers a guaranteed amount of cash up-front for a license to the content they produce. Snapchat will then have the exclusive ability to sell ads against the content and keep all the revenue the content generates.
As Kafka notes, this model is like that of television networks, which license programming and keep the revenue from ad sales. According to Kafka, some of Snapchat’s publishing partners are amenable to a licensing arrangement while others are more hesitant.
A disturbing precedent?
Those who are hesitant arguably have good reason to be. The cost of giving up control of content to platform providers has been a topic of conversation for some time, but revenue sharing arrangements like those offered by Snapchat and Facebook have allowed publishers to retain some control over ad sales and to participate in the upside from that content, making the so-called platform game a little more palatable.
Snapchat’s new approach, however, puts publishers in a tough spot. They want to reach Snapchat’s audience, and those that already have access to it almost certainly don’t want to be cut off from it. But at the same time, licensing their content to Snapchat without revenue share or control would make them little more than contract content creators. That obviously would leave them in a precarious situation where their brands are potentially minimized and they are potentially commoditized.
If enough publishers bend to Snapchat’s will, it could send a signal to other platform providers, namely Facebook, and encourage them to follow Snapchat’s lead in negotiating more aggressively with publishers for their content. That would create a seismic shockwave in the digital publishing economy and validate the fears of those who have been warning about the perils of publishers’ embrace of third party publishing platforms.
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