Snapchat vs. Instagram: Analysts & Journalists Are Simply Missing It

by Neil S. Siskind

Analysts and journalists continue to misunderstand Snap, and continue to publish misguided articles and analyses bashing the company and inappropriately comparing its financials to those of Facebook/Instagram (Facebook and Instagram will be referred to herein, collectively, as “Instagram”).

Analysts are trained to compare companies within the same space or within the same “breed”. But, when businesses have no similar breed- or operate within entirely new spaces- such as with e-commerce companies earlier in the century and with Snap today- analysts keep getting it wrong by trying to compare what is not comparable. They are unable to predict a company’s future any better than any of us when it comes to something brand new. Worse, by pretending they are on-point, they mislead investors either to the upside or to the downside. All the same apply to financial market journalists.

Instagram is in the business of asking “us” to provide content so that it can sell advertising around our meaningless and self-directed postings and pictures.

Snap is in a different business.

Snap is in the business of providing fun and entertaining features, games, and services to attract users to whom it will sell and broadcast (either through downloads, through subscriptions, or by selling advertising based on viewership) professionally produced content, such as that of Time Warner, A&E, and CNN. Drones, maps, augmented reality tools- they are all designed to build a fan base, or “club”, or “cult”, of “Snapchatlovers” to which Snap can deliver and broadcast original and professionally-produced movies and television-type programs. Snap is almost competing more with the A&Es and Bravos and Hulus of the world than with Instagram. Just because Instagram steals another company’s ideas and copies another company’s services, and then places ads around them, does not mean that such other company desires to be in Instagram’s business. Snap never wanted to be in Facebook’s or Instagram’s social media content advertising-based businesses- or else it would simply attempt to sell more ads.

Think of Instagram as a toy store that sees its toys primarily as ways to sell ad space around customers’ in-store toy-play, while thinking of Snapchat as a toy store that sees its toys primarily as ways to drive customer viewership of professionally-produced content … different businesses; one store is for customer activities that get immediately monetized through ads sent to those customers, and the other store, for customer activities that lead to subsequent monetizing through the delivery and broadcast of high level entertainment to those customers. People open different toy stores for different customers and different purposes.

Snap has already become the first social media company with the primary goal of converting its social media audience into viewers of professionally-produced content- as opposed to Instagram’s (and Facebook’s) goal of driving its users to its more transient, self-centered, user-generated content.

Try looking at it this way:

The term “social media” as it applies to Instagram, primarily means people socializing through dialogue and sharing of photos, and that is the “media” part of it.

The term “social media” as it applies to Snapchat, primarily means television and movie studio produced entertainment-media that is broadcast and distributed on a platform where people are socializing. The dialogues and shared photos are not the media part- they are just entertainment tools to attract and keep users who become the audience for the subsequent media part.

You will read analysts’ notes that the advertising world and social media personalities are frustrated that Snap will not cozy-up to them or help them in their efforts to buy and sell advertising. This is because Snap does not really want or need these ad sources. Snap is interested in distributing and broadcasting content of major studios that will sell their own advertising space and split the fees with Snap. In the future, advertisers will have no choice but to come to Snap to buy advertising space, since the audiences those advertisers will want to reach will be reached by Snap with the professionally-produced content Snap now has, and that which it will be adding to its platform in the future; quality in-demand content, as opposed to Instagram’s gratuitous and self-serving postings.

Snap does not have to get more “users” than Instagram in order to succeed- even TV networks don’t have Facebook’s or Instagram’s user bases. Advertising-oriented business models, like those of Facebook and Instagram, require constant user-growth to increase their sales and earnings, and, hopefully, their stock prices (in cases where such companies are public companies)- but content-consumption models, like those of Bravo and HBO (and Snapchat), require loyal audiences to which they can keep selling (if using a subscription or download model) or keep broadcasting (if using an advertising model) new programs. Snap wants a different audience than Instagram’s- for a different purpose. It wants loyal “Snapchatlovers” who will play, stay, and whom Snap can parlay into viewers of a large volume and variety of professionally produced TV-type shows and movies on the Snapchat platform- and that comes with big money- potentially much bigger than ads placed around silly posts and low quality user-generated videos and pics.

Instagram seeks to “advertise to” (or “bombard”) its users to make its money. Snapchat seeks to “entertain” its “audience” to make its money. Which sounds like a better plan to you? But it matters not. Instagram makes a bundle of money in the way it does business, while Snap makes (well, hopes to make) a bundle of money in the way it does business. It’s not one company or the other- despite how analysts and journalists are presenting it.

It true that, presently, some of Snap’s revenues come from advertising connected to user “snaps” (with the rest of it coming from ad revenue-sharing deals with content providers), but this is more a function of Wall Street’s demand for fast revenue growth and increases in quarterly revenues and earnings than a function of Snap’s ideal revenue sources. Wall Street is not the ideal place for idealism. Longer-term, ad revenue-sharing, content subscriptions, and content downloads (and, potentially, proprietary hardware sales) will make up the bulk of Snap’s revenues if Snap is to become what it wants to be- a broadcast, distribution and production platform of quality content for its loyal “Snapchatlovers”. But, if Snap is to be an independent entertainment platform, it needs to move fast to get the mass media broadcasts and professionally-produced content it needs in order to attract viewers and increase revenues and earnings from these sources.

While I used to see Apple as the best and most likely suitor for Snap, I think that the window of opportunity for both companies has closed. Snap will likely be bought in the coming months by Google for its need to combine quality social media and augmented reality tools with its YouTube service (and, perhaps, to have as an exclusive AR service for its Android platform now that the new iPhone has significant AR features), or by a more traditional media company, like Disney or Netflix, that wants/needs Snap’s young and loyal social media audience to drive content viewership, along with Snap’s offerings of augmented reality features for its platform. (Any media company that has its own famous, beloved, and innovative social media platform with hundreds of millions of daily active users that can be used to promote its programs is operating with a great advantage over its competitors.) Whether any of these combinations is something Snap wants, as opposed to remaining an independent platform for the broadcast and distribution of various third-parties’ movies and TV-type shows (as well as its own productions), remains to be seen.

As part of any investor’s evaluation of whether to invest in Snap, Instagram, like any other media company, app, or platform, is just one of many factors to consider when assessing the overall landscape of content and media production, broadcast, and distribution and how Snap is and will be affected thereby; but, it is neither the only nor the most important factor, nor is it the determinant of Snap’s ultimate success or failure.

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About the Author

Neil Siskind is: President of The Siskind Law Firm, focused on product investments, trademark licensing, product distribution, and real estate; Founder & Chairman of The Fatherhood Assignment™, a think tank and advocate for children with absentee fathers; Founder of the global charity marketing initiative, Caring is Free®; Founder of National Fatherhood Day™; Owner & Conservator of The Neil S. Siskind Nature Preserve, over 7 acres of conserved waterfront land along New York’s majestic Hudson River; and author of The Complete Guide To The Ways To Manufacture & Sell Your Products.

Other Recent Articles by Neil S. Siskind:

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Neil Siskind’s Poetry

All Things Die In The By-And-By
by Neil S. Siskind

I examine it for hours,
which you adjure me to justify;
to you, it’s just a flower,
this that I savor hour after hour
with the realization and dolor it will soon wither and die,
as all things will do in the by-and-by.

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskind help children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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NEIL SISKIND- Poetry

Old Dutch, He Loved The Country
by Neil S. Siskind

 

Old Dutch, he loved the country
roamed for hours thru them hills
runnin’ down the mountain
gettin’ thrills

Old Dutch, he loved the country
he was off just like a horse
fast across the mountain brow
never gettin’ lost

Old Dutch, he loved the country
and for hours he’d be gone
I always wondered where he’d gone to
all alone

Old Dutch, he loved the country
he just bulldozed through the brush
and plowed through every snowbank-
mush, mush

Old Dutch, he loved the country
he was born up there ya see
it smelled to him of mama-
he felt free

Old Dutch, he loved the country
and when feedin’ time arrived
father beckoned from the mountain top-
‘til Dutch from mountain side

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskind help children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products