The Snap company is reversing a 2016 proposal to pay Discover publishers a flat licensing fee in exchange for keeping all of their ad revenue. It’s unclear how many of Snapchat’s 90 media partners agreed to those terms but the promise of guaranteed income gave them plenty of incentive to hop on board.
[bctt tweet="Snap will stop paying licensing fees to Discover Publishers, leaving them to rely on ad revenue. Read on for all the details." username="relevance"]
Now, the company has decided to go back on that and take a more traditional route by sharing ad revenue in a 50/50 split with publishers. The company has been notifying their media partners of this change for the past few months. This leaves MTV, Vice, Vogue, CNN, the NBA, and dozens of other Snapchat partners entirely reliant on their own advertising revenue.
According to Digiday,
“Snap is now more focused on having the same general “template” for the content and advertising deals it signs with media partners, which range from big media giants such as NBCUniversal (a Snap investor) and Viacom to digital publishers like BuzzFeed and Refinery29.”
This decision ties into Snap’s reported history of giving major media partners more favorable terms. By putting all media partners on the same template, the company will even out the playing field and give smaller publishers more incentive to advertise with the company.
This news comes right in the middle of a rough year for Snap. Back in February, the company’s market cap sunk by 1.3 billion after the release of a loathed redesign. User growth slowed and the company missed Wall Street’s audience and revenue estimates for their first quarter.
The divisive redesign is partly to blame for Snapchat's down quarter but it can also be attributed to their shift into programmatic. According to Digiday, this resulted in the price of Snap Ads (the vertical video ad unit that runs inside Discover video shows and publisher channels) falling 65% compared to the previous year.
Snapchat is doing their utmost to bounce back and win back the favor of Wall Street and publishers. Last month, the company started testing out a new Ecommerce feature with Discover publishers, which allows Discover brands to sell items out of the in-app Snap store.
The company also hosted publisher summits in New York and Los Angeles to connect with their media partners, answer questions, and learn from them.
It's too soon to tell whether or not the decision to revert the licensing fee policy will result in growth, but it's clear that Snap is doing whatever they can to charm their publishers and expand content offerings.
Do you agree with Snap’s decision to cut off licensing fees for publishers? Share your thoughts in the comments.
