How much would you pay to keep Loren Gray happy?
If you have no idea who that is, she’s one of the most followed people on TikTok, and the host of the Snapchat docuseries "Honestly Loren."
She’s a big deal to lot of Generation Z, and the platforms that brought her to fame are now trying to figure out how to give her enough money to keep her and other short-from video stars around.
The micro-video social media world is an entire ecosystem unto itself. It’s an all-enveloping place, one designed to get you to spend as much time liking and subscribing and consuming content as possible.
The more time you spend on TikTok and Snapchat, which is owned by Snap Inc. (SNAP), the more the companies can charge for advertiser impressions.
So whatever it takes to keep Gray and other high-profile users on Snapchat is worth it to the platform’s owners, apparently, as the company can’t afford to lose her full-time to TikTok, or perhaps something as gauche as an old-school television network.
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The Arms Race Is On With The Teen-Favored Video Platforms
In addition to accounts run by actors and pop stars such as Zendaya and The Weeknd, Snapchat and TikTok has created a world of mini-celebrities that might be largely unknown to anyone old enough to rent a car.
But they are VIPs to people of a certain age, as high school student Charli D'Amelio’s 100 million TikTok followers earned her a television deal with Hulu, which is owned by Walt Disney (DIS).
Snapchat began in 2011 as a photo messaging service, and evolved into a short-form video service popular with teenagers, where both celebrities and everyday people can share messages, make-up tutorials and the like.
Instagram, which is owned by Meta (FB), developed its Instagram Live and Instagram Stories in part to compete with the company’s popularity, and the Chinese platform TikTok has been making in-roads with the teen audience and launching dance crazes since it debuted in 2016.
But just as Facebook has been known to emulate any feature a technology company introduces that catches on (such as introducing Facebook Rooms to compete with Zoom), Snapchat has been moving into TikTok's territory of late.
Snap CEO Evan Spiegel told investors earlier this month that users were spending less time posting and viewing stories and instead watching content on Spotlight, Snapchat’s TikTok equivalent, which shares 60 second-videos. (Both Instagram Reels and YouTube Shorts offer similar services for those with shortened attention spans.)
But to keep the short-form video content coming, Snapchat has previously announced it would pay out $1 million per day to popular creators, totaling more than $250 million, and now the company is going to start encouraging creators by sharing advertising revenue.
Snapchat Wants to Give Creators A Cut
Snapchat is currently testing a mid-roll advertisement that will appear in the Stories of a small group of US creators, and a wider rollout is planned in the coming months. The revenue generated from the ad will be shared with the creator, based “on a formula that takes into account metrics like posting frequency and engagement,’ according to The Verge.
Snapchat users already see ads in between friends’ Stories, but this is the first time creators will get a cut of the ad revenue on Stories. The program will only be available to Snap Stars, which are the platform’s power users, either creators or entertainers with large followings that have been verified by Snapchat, indicated by a gold star.
Last year TikTok introduced a feature that allowed users to tip their favorite creator, while Snapchat has introduced the Creator Marketplace to facilitate brands working with video creators.
At the moment, TikTok doesn’t share advertising revenue with its users, instead it set up the Creator Fund to pay users with at least 10,000 followers and 100,000 views in a 30-day period for their videos. TikTok creators can make bank by riding the service to enough prominence to make money off of endorsements.
As noted by Business Insider, the TikTok creator trio of Nicole, Natalie, and Nika Taylor, “who have over 10 million followers on the app, charge $750 to promote a song in a single video, $1,400 for two videos, and $2,000 for three videos,” while D'Amelio partnered with Dunkin’ for the Charli Cold Foam in February, featuring a whopping three pumps of caramel and cinnamon sugar on top.
But will this be enough to appease the TikTok creators, or will they have to follow Snapchat’s lead and start sharing advertising revenue?
Snapchat had 319 million daily active users last year, whereas TikTok had 14.3 million users in September of 2021. It’s still fairly common for power users like Gray to use multiple platforms, as D'Amelio has her own Snapchat competition show where she squares off against her sister.
After sharing revenue, will these platforms start trying to sign exclusive deals with their biggest names? There’s no indication that’s the current plan, but if the companies want to stay competitive, it might be the next logical step. After all, you can’t let your main rival be the one with all the cool dance moves, and you're caught flat-footed.
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