Snapchat may stop sharing ad revenue with Discover media partners in favour of a flat upfront fee
Snapchat reportedly has ambitions to pay media partners on Discover a flat license fee upfront instead of sharing ad revenue as it transitions from social company to media owner, adopting the same model as TV networks.
Snapchat currently allows brands to keep their ad revenue
Currently the platform lets publishers on Discover sell ads against their content, and keep hold of the ad revenue generated as a result. Snapchat also sells ads against the same content using its own sales team.
However, according to Recode, the platform now has ambitions to pay content partners a flat license fee upfront and keep the ad money for itself, adopting the same model that TV broadcasters use when they commission content. Ultimately it would mean Snapchat would have full control of its ad inventory. The platform hopes to have new deals set up in the next month, the publisher reports.
If the new terms are to be believed, it is telling of Snapchat’s ambitions to convince media partners to push more original content on its platform, as it becomes a media owner in its own right. It has already told content companies to create ‘Snapchat Shows’, a promising new TV-like format for the platform, for which the license model could apply as well, according to reports.
While there are positives for publishers, who will have a guaranteed payday when they create custom content for the app instead of relying on ad sales, it also puts a cap on how much revenue they can generate, and takes away control over the way their content is sold. It is reminiscent of a 'taking not sharing' culture that publishers are grappling with on third party aggregators Facebook and Google.
The news comes months after the company hired Viacom’s Jeff Lucas to head its sales team, and while rumours intensify of Snapchat’s IPO. These started with the platform's hire of Imran Khan, the banker who led Alibaba’s record-setting IPO in 2014, as its chief strategy officer in the same year.