Snapchat Reduced Spotlight’s $1 Million-per-Day Payout Because of Flood of ‘Copycat’ Videos, Says CEO

Spiegel: Company's content business will continue to face 'intense' competition

Snap CEO Evan Spiegel
Andreas Gebert / Picture Alliance for DLD / Hubert Burda Media/picture-alliance/dpa/AP Images

Snapchat cut the payout amounts for creators’ viral videos in the Spotlight section because the program was producing too much “copycat content,” according to Snap CEO Evan Spiegel.

Originally, Snapchat said it paid out more than $1 million per day to the top Spotlight contributors, allocated based on engagement with their content. Starting in June, the company reduced the amount it pays overall — to what the company characterized as millions of dollars per month — evidently leading some users to abandon Spotlight.

According to Spiegel, speaking Wednesday at the Goldman Sachs Communacopia investor conference, one of the issues for Spotlight had been the homogeneity of the section’s videos: Users would see the winning content, he said, and “just make the same thing.”

After changing the terms for the program to try to attract a greater diversity of content, Snap has seen record-high submissions to Spotlight, Spiegel claimed. The company is now focused on developing technology for “content understanding,” to determine at scale what makes a video compelling and to be able to recommend that to Snapchat users, Spiegel said.

Spiegel said Spotlight, the TikTok-style user-contributed video section the app launched nearly a year ago, represents “the first time any video has been able to go viral on Snapchat.” At one time, he and other company execs were “terrified” about harmful content reaching a large audience quickly. Snap has mitigated that risk by having the Spotlight section heavily moderated, both using AI and human reviewers, he said.

Snapchat’s entertainment business, including its original short-form series, is the area where the company faces the biggest battle to win consumers’ attention, Spiegel said. At a high level, Snapchat’s entertainment business competes with “everything in the umbrella of entertainment,” including games. “The competition there is going to remain quite intense,” he said.

With Snapchat’s video business, “we had to convince people for years to cut video vertically,” Spiegel said, adding that has become much less of an issue today.

Snap is coming off a record quarterly revenue haul in Q2, with sales more than doubling to $982 million. During the period, Snapchat netted 13 million daily users, the best user growth rate in four years, for an average of 293 million DAUs worldwide. For the third quarter of 2021, Snap expects to reach 301 million DAUs worldwide, which would be a 21% year-over-year increase.

Other parts of Snap’s business are less about vying for time against other apps than about improving Snapchat’s utility, like connecting with friends or finding new products. Regarding international expansion, the company is focused on making Snapchat culturally relevant and localized in individual countries, including across Europe and in Japan, Spiegel said.

Spiegel said Snap is also bullish on using AR lenses in the Snapchat app to facilitate shopping, for example, by letting users visualize themselves wearing different apparel.

“We felt there was a huge opportunity to improve the shopping experience, to make it something that’s much more immersive and fun,” he said. About 30% of Snapchat users’ discretionary income is spent on fashion accessories, according to Spiegel.

COVID lockdowns have been “challenging” for Snap from an engagement standpoint, Spiegel acknowledged. “The good thing is as the lockdowns are reduced… we definitely see improvements in metrics that are important to us including Story posting and usage of the Map,” the CEO said.

The Snapchat app is turning 10 years old this week, Spiegel noted. “When we first started our business, people were only using their cameras to save important moments,” he said. “We identified this opportunity to use the camera to communicate.”