Snapchat is paying out $1 million a day to top creators as competition for influencers intensifies.
It is the latest move in an arms race among a growing list of social media companies that depend on short-form, user-generated videos.
The new feature, called Spotlight, rolled out on Monday. Snap, which once distinguished itself as a friend-to-friend messaging app, is now letting users submit video clips of up to 60 seconds that can be viewed by anyone on the platform. It comes weeks after the platform opened up public profiles to everyone.
<p>Snap says it will determine who gets paid, and how much, based on a proprietary formula that may include metrics such as views and engagement. Snap's content algorithms will influence how many people see Spotlight submissions. Those formulas in part consider how users' content has performed in the past. </p>
<p>As <a href="https://dot.la/tiktok-wechat-rivals-cleaned-up-during-a-weekend-of-confusion-2647741538.html" target="_self">TikTok's future in the U.S. remains in limbo,</a> competitors have sought to lure creators and their followers with shiny incentives. Shortly after TikTok <a href="https://newsroom.tiktok.com/en-us/introducing-the-200-million-tiktok-creator-fund" rel="noopener noreferrer" target="_blank">launched its $200 million creator fund</a> (which the company has said will grow to $1 billion within three years), Instagram <a href="https://techcrunch.com/2020/08/05/instagram-reels-launches-globally-in-over-50-countries-including-u-s/" rel="noopener noreferrer" target="_blank">rolled out Reels</a> globally, and reportedly sought to <a href="https://www.wsj.com/articles/facebook-seeks-to-reel-in-tiktok-creators-raising-stakes-in-social-media-rivalry-11595928600" rel="noopener noreferrer" target="_blank">woo creators from TikTok with gobs of money</a>. Not to be outdone, Triller, <a href="https://dot.la/triller-2646853219.html" target="_self">another short-form social video competitor</a>, has reportedly attempted to <a href="https://www.nytimes.com/2020/10/07/style/triller-app-tiktok.html" rel="noopener noreferrer" target="_blank">attract top talent with luxurious meals, cars and mansions</a>. </p>
<p>Now it is Snap that is dangling money to try to tip the user-generated video scales in its direction. </p>
<p>Not that the company has been struggling. Since a <a href="https://www.tubefilter.com/2020/09/09/snapchat-vidcon-2020-user-profiles-analytics/" rel="noopener noreferrer" target="_blank">banner Q3 earnings report</a>, Snap's stock has soared nearly 60%. </p>
<p>Monday's announcement further illuminates a new contour in Snap's strategy, however: staking out a claim in the music-accompanied short-form user-generated video space. Spotlight will leverage Snap's <a href="https://www.bloomberg.com/news/articles/2020-08-03/snap-lands-deals-with-top-music-companies-to-add-songs-to-videos?sref=4Kf8RwDw" rel="noopener noreferrer" target="_blank">recently inked music licensing deals</a>, which have already been used to <a href="https://www.theverge.com/2020/10/15/21516348/snapchat-snap-sounds-music-ios-update" rel="noopener noreferrer" target="_blank">allow users to add songs to messages they send on Snapchat</a>. The new feature also presents a strong use case for <a href="https://dot.la/snap-acquires-voisey-2648998840.html" target="_self">Snap's acquisition last week of Voisey</a>, which allows users to easily create and upload songs of their own.</p>
<p>Spotlight also appears poised to bring new revenue streams to Snap. The nine-year-old company has never turned a profit. According to the new feature's terms of service, it "may contain advertisements," and the payouts made to top videos "may be funded either by Snap or from a portion of the proceeds we receive from advertisements distributed in Spotlight."</p>
<p>The feature is currently available in Australia, Canada, Denmark, France, Germany, Ireland, New Zealand, Norway, Sweden, the United Kingdom and the U.S., "with more countries to come soon," according to a representative. </p>
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Santa Monica-based Snap has acquired Voisey, a U.K.-based music-tech startup that launched in 2019. The deal was reported by Business Insider, which did not include terms.
Voisey is a mobile app similar to TikTok, but with more of a creator-oriented bent. Whereas TikTok allows users to lip sync and dance to songs in the app's library, Voisey enables users to co-create new songs, or parts of songs, up to a minute in length. Music producers upload their own beats, upon which more users can then add layers like vocals, harmonies or percussion, with support from tech features like auto-tune or other audio enhancements.
<p>Voisey was founded by a group of music-tech entrepreneurs from Norway and the U.K.. It subsequently picked up just shy of $2 million in investment, according to Pitchbook. Among those investors was Norwegian DJ duo Stargate, which described Voisey as <a href="https://www.musicbusinessworldwide.com/a-year-after-selling-catalog-stargate-invests-in-voisey-app-calling-it-the-future-of-songwriting/" rel="noopener noreferrer" target="_blank">'the future of songwriting.</a>' </p><p>Music industry analyst Mark Mulligan of MIDiA, a research firm, <a href="https://www.midiaresearch.com/blog/snapchat-buys-voisey-to-enter-the-music-market" target="_blank">put the acquisition in the context</a> of the ongoing growth of music-oriented creator tools like L.A.-based Output, which recently <a href="https://dot.la/arcade-music-software-2648449973.html" target="_self">raised $45 million in its first ever fundraise</a>.<br/></p><p>"We are on the cusp of a revolution in music making," Mulligan wrote, "with a host of new tools and services set to create the fastest growth in music creativity ever seen. Snap wants to be a part of that."</p><p>Snap did not reply to dot.LA's request for comment. </p><p>As an indicator of how these tools and services can lead creators to legitimate success, earlier this year, California-based artist Olivia Knight signed with Island Records and Warner/Chappell Music <a href="https://www.musicbusinessworldwide.com/island-records-and-warner-chappell-sign-poutyface-discovered-via-music-app-voisey/" rel="noopener noreferrer" target="_blank">after she gained traction on Voisey</a> by creating over 100 videos on the platform. As of September, the app housed over 11 million new songs, which had collectively been played over 200 million times, according to Music Business Worldwide. </p><p>The move follows Snap's recent launch of its TikTok-esque <a href="https://techcrunch.com/2020/10/15/snapchat-launches-its-tiktok-rival-sounds-on-snapchat/" rel="noopener noreferrer" target="_blank">"Sounds on Snapchat" feature</a>. It remains to be seen how exactly the company will integrate Voisey, but the acquisition signals a broader continuation of the <a href="https://dot.la/article-17-2647841718.html" target="_self">rising prominence that music plays in social media</a>.</p>Snap's stock has been on a tear since its <a href="https://dot.la/snap-q3-2648416547.html" target="_self">upbeat Q3 earnings report</a>, which goosed a next-day share price increase of 28%. Since then, the stock has risen another 21%, including a near-5% bump on Friday by the market's close.
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Snap shares soared after CEO Evan Spiegel touted the company's highest Q3 growth rate since 2017. The outspoken executive used Tuesday's earnings call to highlight the social media platform's efforts to engage users "following the murders of George Floyd, Ahmaud Arbery and Breonna Taylor."
The upbeat earnings report sent its stock soaring 20% in after-hours trading.
<p>The Santa Monica-based social media and camera company beat earnings expectations with revenue up 52% year over year in Q3 to $679 million. The company, which is still not profitable, trimmed losses this quarter to $200 million from $227 million the previous year.</p><p>With more people stuck at home during the pandemic, Snap saw daily active users grow 18% year-over-year to 249 million. The average number of Snaps created daily grew 25% in that time.</p><p>"Over the past year, as the changing public health landscape accelerates the adoption of digital products, we believe there is a large opportunity for us to further empower new behaviors, with AR, entertainment and commerce," Spiegel said.</p><p>Spiegel has not been afraid to wade into discussions around systemic racism, calling for tax reform and reparations over the summer in <a href="https://www.snap.com/en-US/news/post/we-stand-together" rel="noopener noreferrer" target="_blank">a lengthy memo to employees</a>. On Tuesday, he said that the company responded to the summer protests over the deaths of Floyd, Arbery and Taylor, by publishing curated community stories "featuring powerful Snaps from our community, which ranged from breaking news about peaceful protests, to a dialogue about what it means to be living while Black in America." </p><p>He added the company is also providing a dedicated breaking news section for media partners like NBC News and ESPN.<br/></p><p>Snap's chief financial officer, Derek Andersen, tempered expectations leading into Q4. While Q4 advertising demand has historically been bolstered by the holiday season, it's unclear if that will materialize this year, Andersen cautioned in prepared remarks. He said the company is also expecting year-over-year expense growth to be likely higher in Q4 than to date due to efforts to "double down" on existing momentum.</p><p>Snap had seen its stock rise significantly over the summer as the Trump administration zeroed in on competitor TikTok and threatened a ban on the China-owned viral-video company over national security concerns. Snap also launched its own TikTok rival, "<a href="https://press.snap.com/Sounds-on-Snapchat" rel="noopener noreferrer" target="_blank">Sounds on Snapchat</a>," earlier this month, which lets users add music to their Snaps. </p><p>Snap also may have benefited from a boycott by major advertisers, which reduced ad spending by millions over the summer.</p><p>Spiegel acknowledged during Tuesday's earnings call that "the growing focus on brand safety and privacy, across the entire industry, places us in a unique position of strength, as we have invested in these areas from the beginning of our business."</p><p>"Snap's Q3 earnings results yet again confirm that 2020 is a good year for the platform," said digital marketing company <a href="http://www.socialbakers.com/" rel="noopener noreferrer" target="_blank">Socialbakers</a>' CEO Yuval Ben-Itzhak, who added that Snap's earnings reflect the fact that worldwide social media ad spend increased in Q3 by 56.4%. </p><p>Ben-Itzhak noted that mobile is also emerging as the first screen for users and user-generated content, which has fueled Snapchat's growth from the get go. New features like City Painter and Sounds, have shown its ability to innovate to be "a clear challenger to TikTok and Instagram Reels."</p><p>The company has added more than 180 new Discover channels in Q3, including those by Disney, ESPN, NBC, Viacom, CBS, the NBA and the NFL. It also grabbed onto 90s nostalgia among the over-30s crowd, holding a "Fresh Prince of Bel Air" cast reunion that was watched by more than 35 million.</p><p>"With people spending more time online as a result of the pandemic, Snapchat's premium content has proven to be a favorite with users and marketers alike," Ben-Itzhak said.</p><p>But marketing analytics firm eMarketer Principal Analyst Debra Aho Williamson said nearly all of Snap's gains come from outside of North America and Europe, and noted its otherwise "lackluster growth" is "not completely surprising" as the increase in users from an early "pandemic bump" abated and growth of new social media users have slowed. </p><p>Williamson attributed Snap's "outperformance" to its "rising stature as a direct-response advertising platform" as well as its unique offerings in AR and video advertising. The company has also benefited from an overall increase in ecommerce-related ad spending in digital media during the pandemic, Williamson said.</p><p>Spiegel said the adoption of augmented reality, which the company has heavily invested in, is happening "faster than we had previously anticipated."</p><p>The company said users created more than 1.5 million "Lenses" in Q3 as part of the platform's "Lens Studio," which allows users to create and share augmented reality lenses. Spiegel said Snapchatters play with Lenses six-times as often as they did last year.</p><p>Snap's AR overlays and machine learning capacity has, he said, let luxury brand Gucci leverage its tracking technology to "help people try on their latest sneakers and Snapchat and even buy them directly within the Lens." Spiegel noted that gaming and ecommerce companies in particular have "leaned in" as advertisers on the platform.</p><p>Snapchat is becoming increasingly popular among key-audience, Gen Z. <a href="http://www.pipersandler.com/3col.aspx?id=6039" rel="noopener noreferrer" target="_blank">Piper Sandler's fall 2020 survey</a> ranked Snapchat as Gen Z's favorite social media platform while Instagram fell from No. 2 to No. 3 and TikTok moved up to No. 2. More than half of the U.S. Gen Z's population watched COVID-related news created by Snap's partners, Spiegel said.</p><p>___</p><p><em>Do you have a story that needs to be told? My DMs are open on </em><a href="https://twitter.com/latams" rel="noopener noreferrer" target="_blank"><em>Twitter @latams</em></a><em>. You can also email me, or ask for my Signal.</em></p>
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