Why Snap’s users and investors have such different ideas about what the platform is for.
Caren Babaknia has a lot of silly videos saved on Snapchat. Since high school, the 24-year-old has stored thousands of random, short clips under his Memories tab. He never thought they would be viewed by anyone or worth anything. That changed last November when Snapchat launched Spotlight, a TikTok-like short video feature, and established an initiative that paid users to post. The company distributed up to $1 million a day to users with the most popular Spotlight videos.
It was a rare opportunity for Babaknia, who has hopes of becoming a full-time content creator, to earn money. Since January, he says he has earned more than $100,000 from a handful of viral videos, some pulled directly from his Memories archive. In March, he posted an old clip of his friends standing in a parking lot with the caption: “we just drove five hours to the closest in-n-out.” The video pans from the fast food store to one of his buddies who deadpans, “I think I’m just gonna get a water,” and Babaknia bursts out laughing.
He guessed the clip earned him at least $15,000. (Vox was not able to independently verify the exact amount Babaknia has made from his Snapchat activity.) “It’s insane,” he told me. “I’ve told my real-life friends how much I’ve made off of Spotlight, and they either don’t believe me or they’ll only post a couple of videos and give up entirely.”
The lack of faith, he theorized, stems from people’s general disregard of Snapchat as a viable platform. While TikTok’s biggest names are booking The Tonight Show and Superbowl commercials, there is no such thing as a Snap star — and no way to become one. Babaknia has 45,000 followers on TikTok (after months of consistent posting) but has less than 1,000 followers on Instagram and YouTube and about 5,000 on Snapchat. Fame, it seems, is not a viable currency on the app unless the user is already internet famous. For some, that reduces Spotlight to a hollow endeavor, despite the potential to earn from the pool of cash.
The way Babaknia sees it, TikTok produces overnight fame, and Snapchat offers overnight riches. He’s chasing both while working part time as an AT&T salesman, but the monetary success from Snapchat feels tangible. Still, he acknowledged that the chances of becoming a viral phenomenon are slim on both platforms. Snap might be the cash cow, but the downside is its lack of cultural relevance. “On Snapchat, you’re almost anonymous,” Babaknia said, explaining that the platform, despite the cash, doesn’t raise a creator’s profile. “People want to grow an audience.”
TIKTOK PRODUCES OVERNIGHT FAME, AND SNAPCHAT OFFERS OVERNIGHT RICHES
Snap wasn’t designed to make stars or boost viral content. Snap is, in its own words, a camera company sustained on intimacy and existing social networks. These factors continue to attract a steady cohort of teenage users, who enjoy the ability to send and view fleeting messages and posts. People come for their friends and stay for their friends. But beyond these core social features, Snap has bigger ambitions with augmented and virtual reality. So why, then, is the company dishing out millions of dollars a month on a clone of TikTok? What exactly is Snap trying to accomplish — and do users even care?
The cultural decline of Snap
Once upon a time, like around 2017, Snap was the go-to app to watch casual, day-in-the-life content from celebrities, influencers, and friends. It satisfied our voyeuristic impulses in one unified feed. (It was like a vertical Instagram Stories, organized in chronological order.) That is, until its controversial redesign, which siloed celebrities, influencers, and brands onto the Discover page, away from users’ actual friends. The move, unsurprisingly, was roundly criticized by users and celebrities alike.
“What Snap had done was rip influencers out of the picture completely,” said Turner Novak, investor and founder at Banana Capital. “They decided that they weren’t going to prioritize this class of users on the platform.”
Snap’s stock value became so volatile in 2018 that a tweet from Kylie Jenner sent it tumbling. “[D]oes anyone not open Snap anymore? Or is it just me...” Jenner asked her 24 million Twitter followers. She later referred to Snap as her “first love,” but if Jenner’s affection was any indication, first love is fickle, and the damage to Snap’s reputation then seemed irreversible. The comment cost the already-precarious Snap $1.3 billion in market value. A month later, Rihanna lambasted the company for hosting an ad that prompted users to either “slap Rihanna” or “punch Chris Brown,” further tanking its stock price.
All in all, 2018 was a tough year for Snapchat. The platform was reeling from Instagram’s successful replication of its 24-hour Stories and lens filters in 2016. Advertisers and investors were losing faith in its long-term outlook and ability to turn a profit; celebrities were growing disinterested. It didn’t help that Snap gave itself the interface equivalent of a break-up haircut at the start of the year. The app’s revamped design frustrated users, and more than a million people signed a Change.org petition demanding that the update be reversed.
Snap refused to overhaul it entirely, and CEO Evan Spiegel stated it would “take time for people to adjust.” To Snap’s critics, it seemed like the beginning of the end (the “snapping point,” according to a Verge article), or rather, the continuation of an inevitable decline triggered by Facebook. Scott Galloway, a New York University business professor revered for his prescient opinions, predicted that a dying Snap would eventually be snatched up by Disney or Amazon. The app’s growth had significantly slowed, and its daily active user base was shrinking.
Nevertheless, Snap persisted. Spiegel was right: After months of grumbling, enough people adjusted. Its youngest users today can’t recall a time when the app looked significantly different. At the Snap Partner Summit in May, the company announced that 500 million people use the app monthly, with about 280 million checking it daily. Snap brought in about $2.5 billion in 2020 and $770 million in the first quarter of 2021, with most of its revenue generated through advertising. But in spite of this steady and impressive comeback, Snap’s relevance is still disputed. There is no clear public consensus about its purpose as a platform. Is it an app for messaging, selfies, shopping, or watching?
There are divergent perceptions of Snap in the public discourse. One is futuristic, a vision embraced by the company itself. The other reduces Snap to an app useful for communicating via disappearing messages enjoyed by teens. For these users, it’s a natural alternative to texting and staying in touch with friends.
“I think it’s interesting that Snap is being called [a teen app] because most of the people I know that started using it in high school still use it today,” said Devin, a 24-year-old Snap user from Indiana. “Maybe not as often, but checking it at least. I’m 24, and my friends on Snapchat range from about 21 to 31. It’s definitely more popular with teens, but I wouldn’t say that it’s an app strictly for them.”
Snap continues to outrank Instagram according to a national survey of 9,800 US teens, although TikTok has emerged as a serious contender in the battle for Gen Z. But beyond the quarterly business coverage of the company, Snap doesn’t dominate headlines the way TikTok does. It receives an occasional mention in local news coverage, usually of incidents of bullying, racism, or underage sexting that have been documented or occurred on the app.
If the company’s statistics are to be taken at face value, however, these general assumptions underestimate the app’s active user base and its potential for growth. Snap is reportedly on about half of all American smartphones and reaches 90 percent of Americans ages 13 to 24. The monthly audience for its Discover feature is greater than Netflix’s (although that might be an irrelevant comparison, based on the type and length of content), and the company has partnered with celebrities and influencers beloved by Gen Z for original content, including Will Smith, Megan Thee Stallion, David Dobrik, and the D’Amelio sisters.
Snap’s true believers see the future in AR
Novak, the investor at Banana Capital, described Snap’s business model as a mix of messaging, content, advertising, software, and hardware. “Snap has always been very strategic, and didn’t care how the business community thought of them,” he told me. “They built for their core demographic, which are Gen Z and young millennials.” Now, it appears the company is taking a page from the playbook of major Chinese social apps in a quest to create a “super-app” — an all-in-one platform that offers features for gaming, shopping, messaging, payments, and news. And it’s betting on augmented reality to accomplish that.
Most social media users are already familiar with AR technology, whether they’re aware of it or not. Camera filters or “Lens,” as Snap calls them, are features Snap aims to monetize through advertising and e-commerce. “AR is something Snap can dominate now that it has a clear business model and its priority is no longer retaining users,” Novak added. “Years ago, no one cared because, well, everyone thought Snap was dying.”
Over the past few years, Snap has developed an ecosystem of AR-related products through tools like Snap Kit and Lens Studio — which are geared toward app developers and brands, rather than consumers. With these tools, developers can create filters, lenses, and other interactive visuals for regular Snap users.
And on the consumer end, the company promised more AR capabilities that allow people to shop and search for items, play games, and better connect with friends, brands, and businesses. Snap has collaborated with brands to host betas where users can “try on” products with AR and be prompted to purchase directly through the app. It’s a top-down strategy that the average Snapchat user likely pays little to no mind to as these added features don’t affect their regular usage of the app.
Yet, these developments are exciting to an insular ecosystem of people: venture capitalists, entrepreneurs, and techies who are bullish on Snap’s long-term success. In their eyes, Snap is at the forefront of building the elusive metaverse. There is no single definition of the metaverse; in summary, it is an immersive online space that has been described as “the sum of all virtual worlds, augmented reality, and the internet.” Sure, that description sounds like the plot of a science fiction novel, but the company is actively embedding its tools and products into a larger digital landscape. Its partnership with Samsung, for example, will integrate its Camera Kit into all Samsung phones, which Novak estimates to be about 20 percent of all Android devices.
“It’s always astounded me how broad the reach for Snapchat really is,” Novak said. “That’s because people like me — venture capitalists and white-collar people — will look down at its reality-TV content or the latest Kim Kardashian pics on the Daily Mail, but in reality, the common denominator of consumers really care or are interested about it.”
Joey Rauwreda, a 17-year-old high school senior from Michigan, is surprised to hear that adults perceive Snapchat as less relevant than TikTok. It remains one of his most-used apps since he downloaded it in middle school. Most, if not all, of his friends are on it daily. “I probably open the app 50 to 100 times a day,” he said. “To me, Snapchat is just less formal texting, and I have more friends on Snap than I have numbers on my phone.”
“I HAVE MORE FRIENDS ON SNAP THAN I HAVE NUMBERS ON MY PHONE”
Rauwreda prefers watching Stories and participating in group chats, and rarely uses camera filters or scrolls through the Discover page. In fact, he avoids Discover due to the amount of cringe content he sees. “I know Snap has Spotlight, the new TikTok thing, but I don’t know anyone at school who uses that,” he said. “Some people at school watch Discover and subscribe to shows, but I think it’s kind of lame. It’s not the main point of Snap.”
But what exactly is the “point” of Snap? Rauwreda isn’t alone in his condemnation of the Discover page, which is where Snap generates most of its revenue. Despite its impressive reach (the company reports that “hundreds of millions” of users use Discover daily), plenty of people joke about — and purposefully avoid — the content.
The page is driven by clickbait, reality television news, and influencer fodder, with a smattering of TV networks and reputable news publishers, including ESPN, the Washington Post, and the Wall Street Journal. Users complain that they’re frequently served tabloid-like content about influencers they don’t care about, or nonsensical clickbait that is best described as “internet garbage.” As a result, Snap is frequently derided as juvenile, and the humor on Discover and Spotlight reflects how the app skews disproportionately young.
“If a video does well on TikTok, it might not on Spotlight,” Babaknia said. “The people who are consuming this stuff are younger kids, maybe around 10 to 15 years old.” The Discover page, in a sense, reflects Snap’s approach to its app: a mishmash of content with various use cases that encourages people to scroll a bit longer. Snap’s challenge, according to tech reporter Casey Newton, is to help people make use of these new tools and functions “in an app that can already feel a little crowded.” Snap’s pursuit of becoming an all-in-one app is certainly exciting to investors, advertisers, and the company itself. But it might be bargaining for more than what teen users like Rauwreda actually want.
It does feel as if Snap is blindly throwing new features at users in the hopes that they’ll stick and stand out. In the case of Spotlight, the $1 million-a-day fund expedited how quickly users adopted the feature. It increased the likelihood of higher-quality content with the promise of cash. That seemed to work. By February, Spotlight had amassed 100 million users, roughly half the amount of daily active users on the app.
Yet, at the May summit, Snap hinted at reducing the amount of money poured into the Spotlight creator fund. The company will offer top creators the opportunity to earn “millions per week,” instead of its previous pool of $1 million a day. Thus, Babaknia thinks his days on Spotlight are numbered. In a recent email exchange with Snap’s support team that was shared with Vox, Babaknia received no clarity as to how the daily amount offered will change. “Nothing is confirmed yet, but I’m worried about losing that earning potential,” he said. “I definitely think they still have the money to support their creators.”
Snap likely does, but why should it continue dishing out money at the same pace? Users are growing accustomed to Spotlight as a feature. “If you think about it, Snap paid about $1 per monthly user to get them on Spotlight,” Novak said. “It put about $130 million into this feature to get it into a good place and is now winding it down.”
Snap, as it proved in 2018, doesn’t really need traditional influencers or content creators, though — not in the way TikTok or Instagram does. And perhaps that’s where it falls flat. There is no cultural production from users, just content consumption (on Discover and Spotlight) and communication. People are already hooked on Snap’s messaging capabilities. Spotlight is simply the latest bait to keep users scrolling as it continues to build toward an augmented reality future. Snap cares about Lens creators and developers, who can create complementary products and apps linked to the app that bring in additional revenue.
In its pursuit of the metaverse, Snap’s purpose in the world remains divided. Is Snap a joke of a social platform or is it the future? It depends on who you ask.