New Snapchat feature Spotlight pays users $1 million for viral hits

Likes are not only here as a vanity metric anymore: They can make you rich. How does that happen?

The Copying-what-works trend

In the social media arena, everybody is copying everyone. It's just the name of the game. In a digital world where any code can be copied and reused, your original idea won't stay yours only for long, especially if it's good.

We can all agree than among popular social networks, Snapchat is the inventor, the king of stories. After all, this was the main purpose of the app: sending pictures and videos to your contacts which they would not be able to keep on their phone. A one-time thing. No strings attached.

But then, Facebook liked it, and zucked it out – to zuck is a verb to say take and make yours –, implementing it on both Facebook and Instagram. The last copy man is Twitter, who also implemented "Fleet" – which is another word for stories – only last week.

Now Pinterest, LinkedIn, WhatsApp, YouTube: they all have a story feature – although some are more used than others. However, after having been taken advantage of for so long, Snapchat has had enough, and will... well, they will also copy another well-performing social network. Why change a winning formula?

By the way, let us not forget to mention Facebook for the News feed. That is right: almost every platform has it too, and it became very natural for us to have one, so much so that we tend to forget who actually came up with it initially. 

 

Screenshot 2020-11-25 110617

Source: Snapchat website

 

Snapchat’s Spotlight feature

Snapchat is launching its new feature called "Spotlight", another short video format, which will be a vertical video feed, much like TikTok. You basically open it because you're bored and scroll endlessly until it's dinner time or until you've lost a solid hour of your life consuming content you probably won't remember.

Snapchat wants to compete with the crazily fast-growing TikTok. This secret sauce of pairing vertical videos with a very addictive algorithm make sure that you stay on the app and come back to it. Since January 2018, so in less than two years, TikTok grew from 11M US users to over 100M US users. A massive 800% increase. You know what they say in the US: look left, look right, one of you three is probably a Tiktoker (sorry).

The feature will be launched in 11 countries, including the US, UK, France, Germany, and Australia.

“Spotlight will surface the most entertaining snaps from the Snapchat community all in one place and will become tailored to each Snapchatter over time based on their preferences and favourites,” Snap said in a statement.

They're of course not the only one to compete: Instagram launched the Reels, YouTube went for the shorts: the game goes on. But Snapchat has done something a little different this time.

 

Screenshot 2020-11-25 110600

Source: Snapchat website

 

A worthy prize

“As a way to celebrate and reward the creativity of the Snapchat community, Snap will distribute over $1m every day to Snapchatters who create the top Snaps on Spotlight, at least through the end of the year.” said the statement. Wait, what? One million dollars?

 

Snapchat will hold a cash giveaway until the end of 2020. And not just any cash giveaway. The app pledged to divide $1 M between the most popular videos creators every day. This means a 35 million giveaway. Bet you have not seen too many like this one.

The app will basically see what got the most traffic and likes and reward the content maker. But wait, you might say, that is really unfair to small content creators with a small following base. Are we just going to give millions to DJ Khaled and Kylie Jenner? Fortunately not. The goal is to give an opportunity to all private and personal account as well as for the biggest stars.

 

Screenshot 2020-11-25 110348

Source: Snapchat website

 

The way it will work is the following: first, the video will be shown to around 100 people. The algorithm will see how people react to it (likes, time watched) and decide it to pass

on the next stage or discard it. The next stage will be of around 1000 people, and the process repeats until the best videos become viral with millions of views. While we don't really know how the cash will be distributed, Snapchat that any viral video – with viral meaning at about 100'000 views per day – will get their share in the cash prize.

What's interesting  about the project is that – asides from wildly encouraging content creation – likes are not only a way to show appreciation and flatter someone anymore. For the first time in social media history, they have become an official voting right, with millions of dollars at the end of the lottery. A truly interesting situation. Viewers turned into juries.

The company said they would run the giveaway until the end of the year, but in the case of satisfactory results, it could continue in 2021. The company wants to bring some novelty and add more users to their 250 million active users.

Will the plan work?

 

About the stock

The Snap stock soared 7% on Monday when the new feature was revealed. The news lifted snaps up to $47.27 before rallying to 44.29 at the time of writing. This results in a +169.73% increase stock price increase for the year. The company indeed saw a surge in engagement due to COVID-19, which we can directly observe on the stock price. 

Loop Capital analyst Alan Gould rates the company as a buy, as he believes that the company could achieve a $200 billon valuation in about 5 years. They increased their expected sales for 2021, multiplying them by at least 13. Recent earnings reports show that estimated FY 2020 EPS jumped from $0.04 to 0.16$ and that FY2021 EPS estimates jumped from $0.32 to $0.62, whereas the company had been posting net losses for years now.

Could it be the beginning of a new era for the white ghost?

 

Screenshot 2020-11-25 112102

Source: Investing.com

 

Sources:

“Needed more Lizzo juice” — Snapchat launches TikTok+. Reebok’s $4B fail. Warner Music’s muted money. in Snacks Daily Podcast

Snapchat Spotlight to pay users $1m a day for viral hits, in BBC News

Snapchat to give users share of $1m a day for most entertaining clips, in the Guardian

Snapchat Launches TikTok-Like 'Spotlight' Short Video Feed Option, in Social Media Today

Snapchat officially launches in-app TikTok competitor called Spotlight, in the Verge

Snap Stock Is Rising After the Company Moves to Copycat TikTok’s Video Success, in Barron's

Snap is launching a competitor to TikTok and Instagram Reels, in CNBC

SNAP Stock Price Increases 17.1% Over The Past Week: Why It Happened, in Pulse 2.0

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