Snapchat is minting overnight millionaires with its TikTok competitor but creators worry the gold rush will end soon

Katie Feeney is a content creator with over 5 million followers on TikTok and is on track to earn over $1 million from Snapchat.Katie Feeney

  • Snapchat released a TikTok copy-cat feature in November, pledging to pay more than $1 million a day to creators. 
  • Early users of the Spotlight feature said they were paid anywhere from a few thousand dollars to over a million dollars.
  • But the gravy train could slow if more creators join Spotlight, Snap decides to ratchet down its daily payments, or it closes the program.
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Kevin Parry, a stop-motion animator and visual effects artist with 1 million followers on Instagram, began posting videos to Snapchat in December. 

At the time, Parry could barely remember his Snapchat account login and rarely used the app to connect with friends or share content as a part of his creator business.

But after learning in November that the platform would be paying creators to post short-form videos to its TikTok-like feature Spotlight, he decided to start sharing.

It paid off. Parry said one of the videos he posted at the end of December earned $4,998, although he has not been paid out yet. Insider verified these rates with documentation provided by Parry.

But Parry's earnings pale in comparison to the takes of other creators, who have earned millions from the feature.

Snapchat's top earning creator is TikTok star Cam Casey, who has 7 million followers and has been paid nearly $3 million for his viral Spotlight videos, he told Taylor Lorenz at The New York Times.

When Snapchat launched the feature in November, the company said it would pay out a total of $1 million a day to participating creators. 

But the company didn't specify exactly how it would divvy up the pot (or for how long). In the first six weeks after Spotlight's release, however, Snap said it had dished out $42 million to over 2,000 users (Snap has 249 million daily active users).

But creators say it is getting harder to score a big payday as more people flock to the feature.

"It is getting increasingly more difficult to have a video perform well now that the word is out," Parry told Insider.

Creators like Casey and his roommate Joey Rogoff, who has also earned money from the feature, told Insider that they don't expect these six-figure payouts to last. 

"We are in week eight now and it's becoming saturated," Rogoff told Insider. "Now it's definitely much more difficult to get those views, which will also lead to lower payouts." 

Casey and Rogoff added that they expect their earnings on Snapchat to drop significantly at some point, but they still hope to keep Snapchat as a monthly revenue stream. 

"This won't last forever," Casey told Insider. "We are just taking advantage of it while here and just trying to do the most with it."

Snap hasn't said how long it plans to continue the Spotlight payment program. The company only committed to making payments through the end of 2020, though a Snap representative said they expect payouts to continue for the foreseeable future.

And it's yet to be determined whether the million-a-day program is a temporary stunt to draw attention to Spotlight's launch or the start of a much bigger commitment by the company to pay its users on an ongoing basis in a program akin to the $1 billion creator fund TikTok set up in July.

Snapchat, like Instagram, has been playing catch up in the short-form video category after TikTok grew massively last year and drew in a cohort of users that Snap previously dominated: Gen Z.

Instagram began testing its short-form feature "Reels" in mid-2020 and has since made the feature a centerpiece in its app's navigation tab. Snap similarly put its Spotlight feature on the first page that users see when opening the app, signaling that the company is prioritizing short-form video alongside its core peer-to-peer messaging features.

Snapchat.

How the Spotlight payout works

Katie Feeney, an 18-year-old high school senior and TikTok creator with about 5 million followers, started posting to Spotlight at the end of November, uploading videos of herself unboxing products, dancing, and joking with friends – some of which she repurposed from her camera roll or had previously posted to TikTok and Instagram.

About a week later, she received a notification from Snapchat.

"When I got the first notification that I may have earned money, I was so shocked and I didn't really think it was real," Feeney told Insider. "I was kind of skeptical."

Then, she received another notification that she had earned over $200,000 from her first week of posting to Spotlight.

After realizing the reality of Spotlight's earning potential, Feeney began posting more content — upwards of 200 posts, she said. However, Feeney said there was a limit to how often she could post: every five minutes. In Snap's terms and conditions for Spotlight, it states that it "may also limit the number of Snaps that Creators can submit over a certain period of time" to maintain quality. 

Feeney is now on track to be paid over $1 million, Insider confirmed with sources familiar with Snap's creator payouts.

Snap's payout system has multiple steps. First, Snapchat will reach out to the creator directly on the app about three weeks after their Spotlight goes viral. Next, the company will follow up with them over email a few weeks later, confirming the amount. Then, Snapchat uses the payment platform Hyperwallet to pay the creators.

Feeney told Insider that she has already received her first payment and will continue to be paid in chunks, ultimately adding up to the $1 million payout.

Read more: 10 TikTok creators break down how much money they earn from brands

Creators are paid on a curve

While total paychecks have been lucrative for some of Spotlight's early users, the company hasn't offered much of an explanation on how it splits its $1 million daily cash pile.

Earnings from Spotlight are paid on a curve and begin after a creator's video has passed a value threshold of $250, according to the company's terms. To qualify for payment, a video must be original and only include music that a creator owns the rights to or that is officially licensed by Snap via its library of songs.

Snap's payment algorithm ranks a creator's video based on various engagement metrics, which include:

  • The total number of unique video views and "favorites."
  • The number of daily users who view a Snap.
  • The time spent by users viewing the video.
  • The past performance of a user's content.

Read more: 15 YouTube stars break down how much they get paid per month for their videos

But notably, it doesn't matter how many followers a creator has. The videos appear in a stream in the app's Spotlight section and will surface even to users who don't follow them. It is similar to how TikTok works.

So to make money from Spotlight, a creator doesn't need to be famous or even have a public-facing account on the app. If their video is uploaded to Spotlight, meets the engagement targets of Snap's content algorithm, and passes a review by Snap's human moderators, it could take off and bring with it a cash windfall.

Snapchat is going after some of the same influencers that helped make TikTok take off

Still, Snap has done a lot of work behind the scenes luring professional influencers to post to Spotlight.

"We had a conversation with Snapchat late November I want to say," said Jess Hunichen, cofounder at the influencer talent agency Shine Influencers. "I know they were doing a really big push in the influencer space and they were reaching out to Shine as the agency to try and have our creators be more active within Snapchat."

Max Levine, COO at Amp Studios, an LA content studio that represents internet stars like Brent Rivera, Ben Azelart, and the Stokes twins, said he receives text messages multiple times a week from Snap's head of creator partnerships with advice and feedback on using Snapchat.

"We're some of the early adopters," Levine said. "I think the Snapchat team has done a phenomenal job of being hands on."

Snap's push into short-form video is clearly a response to the rise of TikTok

Given the wide variance in payouts to creators thus far, uploading a video to Spotlight has been somewhat like playing the lottery. It could bring a user some extra pocket change, or make them a millionaire. 

"Platforms need to deliver on the American dream," said Jon Carney, an executive at the creator-marketing platform Insense. "If you look at the costs, they're putting $1 million a day into it. That could be the cost of competing with a platform like TikTok."

The company's push into short-form video is clearly a response to the rise of TikTok, which has become a go-to entertainment app for young users and marketers looking to reach consumers between 13 and 34 years old — the same demographic Snap showcases when it pitches its app to advertisers.

Snap has historically focused on its peer-to-peer messaging functionality, restricting public content to its Discover page and "verified" creator accounts. But the company has been watching TikTok's growth as it looks to compete more broadly in the social app category. 

Read more: An analysis of hundreds of exec interviews shows TikTok's impact on a wide variety of companies in 2020 like Spotify, Snapchat, and Fastly

TikTok said that it intended for its creator fund to reach hundreds of thousands of users. Early recipients of TikTok's fund — which is limited to US creators who are 18 years or older, have 10,000 followers, and at least 10,000 video views in a 30-day window — told Insider they've been paid pennies for every one thousand video views on the app.  

Snapchat's payouts have often been more enticing. For instance, Casey said he earns about $4,000 a month from TikTok's Creator Fund, a sharp difference from the millions he has earned to post the same types of videos to Snapchat.

"The energy goes where the money is," Casey said. "I put 100% of my focus into Snapchat just because it's where the money is. We'd love to see it turn into more of a long term thing like TikTok Creator Fund."

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