Three Shorts: Snap, Apple, Vox

Hey! Welcome to Three Shorts, a recurring series where I unpack the strategy behind the news in as few bullet points as possible.

Enjoy!

Snap’s take on TikTok — incremental 🤷‍♂️

What happened?

• This Monday Snap announced Spotlight, a new TikTok-esque tab in their home screen.
• When you tap the Spotlight tab, you see a feed of vertical scrolling Snaps submitted by users and approved by Snapchat.
• The format is no different from regular Snaps, and creators are explicitly not allowed to upload videos from other apps (like TikTok).
• Snap will pay users who submit to Spotlight $1m each day through the end of 2020. They haven’t disclosed how they’ll decide who gets what.
• Interestingly, many of the snaps in Spotlight are anonymous.

Why? What’s the strategy?

• Like every other social media company, Snapchat has learned from the rise of TikTok, and decided the threat is grave enough to take action.
• Spotlight’s biggest challenge is to create a feed that’s entertaining enough to compete with TikTok.
• Instead of trying to out-TikTok TikTok, like Reels is doing, Spotlight’s main objective is to cultivate a distinct vibe. If Spotlight can offer a flavor no one else has, people will use it. 
• This is why it’s so critical that Spotlight doesn’t allow users to upload videos from other apps. By enforcing native content, it’s much more likely that a unique culture and meme-set will emerge.
• The trade-off is that other apps have lots of great content, and they’re missing out on it.
• Perhaps this is why Spotlight is paying $1m to creators every day. They need an extra incentive to offset the higher cost of posting on their platform, since users can’t just upload something that already exists.

Will it work?

• In the short run this will make Spotlight worse, but if it works, it’s a much more powerful strategic position to be in.
• Spotlight’s strategy mirrors the classic principle that you should compete to be unique, rather than competing to be the best.
• That being said, it often makes sense to adopt a less powerful position in order to have any position at all. When I first used Spotlight, it was frankly terrible compared to TikTok, and not even as good as Reels.
• Sometimes it’s better to get the flywheel going with easy supply, then as you scale turn your focus towards increasing quality.
• Famously, when YouTube and Vimeo were both getting started, Vimeo fell behind because of their stricter standards for what kind of content they wanted uploaded to their site. YouTube let users upload anything, and that was a huge advantage.
• Bottom line: If I had to guess, I’d say Spotlight will have about as much impact on Snap as Snap Maps did. (In other words: not much.)

Apple’s fee reduction — genteel 🎩

What happened?

• Last week Apple announced a lower App Store fee for developers making less than $1 million per year.
• This new fee structure will bring Apple’s current 30% fee down to 15%, starting in January 2021.
• Developers will have to opt-in and be approved to take advantage of the offer.

Why? What’s the strategy?

• Analysts predict this fee reduction will cost Apple ~$600m in 2021, or about ~3% of App Store sales.
• This is a hit that Apple can easily take, and will make a lot of small developers quite happy.
• Some have speculated that Apple was motivated to do this in order to prevent anti-trust action against them, but I think that’s unlikely to be a major factor. If anti-trust action is coming, this won’t be big enough to stop it.
• Instead, I think Apple’s main goal really is as simple and genteel as it seems: to make small developers happy.
• Apple correctly senses resentment from their developer community, and they understand that small developers collectively represent a huge part of what makes Apple products great. They don’t want to lose them.

Will it work?

• Not as much as Apple hopes it will.
• These kinds of changes feel good for a bit, then people get used to them pretty quickly.
• The real problem for many developers is simply being forced to use Apple’s payment system.
• If you have a website that accepts payments using Stripe, you’d much rather be able to have a unified payment system than to be forced to use In-App Purchases. 
• Apple’s In-App Purchase system is notoriously opaque, and many developers hate it. It’s simply a much worse product than competitors like Stripe, and the only reason Apple hasn’t been forced to improve it is because they have a monopoly on the iPhone.
• I wouldn’t be surprised if Apple is working on this. Look out for improvements to In-App Purchases and Apple Pay at WWDC next year.

Vox’s talent departures — worrisome? 😧

What happened?

• Last week, Vox announced that co-founder and editor-at-large Ezra Klein, and SVP/editor-in-chief Lauren Williams, would be leaving the company.
• Klein will be writing a column and hosting a podcast for the New York Times, and Williams will be launching a nonprofit news conglomerate targeted at Black communities.
• Last week, Vox’s other co-founder Matthew Yglesias left to start his own Substack, Slow Boring.
• Before that, fellow Vox Media stars Casey Newton and Kara Swisher also left for Substack and the NYT, respectively. 

Why? 

• Vox Media seems to be caught between a rock (NYT) and a hard place (Substack)
• The Times offers talent a level of audience, prestige, and salary that’s increasingly difficult for any other publication to match. 
• Substack — and, more generally, the idea of starting your own publication — offers a level of control, ownership, and upside that can’t be matched by any full-time position.
• To make matters worse, this is happening in the context of a historically bad year for advertising, just as the flywheel is starting to accelerate for subscription businesses that rely on deep, direct relationships with their audiences.
• It’s worth noting that this kind of generational churn is normal in journalism — talent graduates, making way for the next set of stars. So there is some chance that pundits are making too much of this cluster of news.
• But, that being said, it has me wondering — is Vox Media doing alright?

What’s next?

• I think we’re entering a period of simultaneous consolidation and fragmentation in journalism and publishing.
• The Times will continue to acquire top talent and build brands like Cooking, Wirecutter, etc.
• The more entrepreneurial journalists will increasingly strike out on their own — whether on Substack or elsewhere — to define their own vision and capitalize on their own success.
• Also: I wonder if a reason why they’re willing to pay top $ for talent is podcasting. The Times saw the success of Joe Rogan and realized personalities can sustain massive audiences with tiny production costs.
• Of course, they did also buy the production company that made SERIAL. So all their eggs aren’t in that basket.

Three Shorts was written by me, Nathan Baschez, with help from Dan Shipper, Bryant Jefferson, and Austin Langlinais.