The Cost of Joining Snapchat’s Discover

For media companies trying to gain or maintain a spot on Snapchat’s digital magazine section, Discover, the company has made one thing clear: Access doesn’t come cheap.

For example, Snapchat requires some firms with channels on Discover, such as Vox Media and Tastemade, to pay Snapchat a guaranteed minimum amount of money over a specific time period, said several people with knowledge of the situation. All the media firms have to give Snapchat a cut of any ad revenue (typically 30%) that they generate on Discover. But minimum guarantees mean Snapchat gets money from its partners even if the partners don’t sell many ads. That puts pressure on media firms to aggressively sell their inventory so they don’t pay out of pocket.

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The question as Snapchat adds new channels is whether it can maintain that sense of exclusivity and ownership over Millennials’ attention. Absent that, it could reduce its leverage in these minimum guarantee negotiations.

Leo Resig commented on this article.
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In discussions with partners, Snapchat executives describe the guarantees as a way for media firms to have “skin in the game.”