Commentary

Leaked Emails Reveal Snapchat Plans

While it’s a huge headache for Sony, the massive leak of its internal documents is an early Christmas present for reporters and bloggers, who got an inside look at the workings of Sony, its business partners, and other companies only tangentially related to it -- for example, through investments by employees. That last category includes visual messaging app Snapchat, which showed up because Sony Entertainment CEO Michael Lynton is an investor and board member.

In addition to a $3 billion acquisition offer from Facebook that was ultimately rejected, the leaked emails include details on a number of quiet acquisitions made by Snapchat itself. For example, Snapchat bought Scan.me -- a mobile startup focused on QR scanning and beacon technology -- for a total of $50 million, including $14 million in cash and $36 million in various stock options. On the wearable technology front, Snapchat bought Vergence Labs, which is producing “Epiphany Eyewear,” “smart” eyeglasses equipped with a video camera somewhat akin to Google Glass, for $15 million in cash and stock.

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Although it sounds like science fiction -- specifically “Minority Report” -- the video eyeglasses could plausibly be integrated with Scan.me technology to detect all mobile barcodes in the consumer’s environment, automatically downloading offers and yielding valuable information about consumer behaviors.

In strategic terms, music plays a major role in the company’s plans for the future, and in the long run CEO Evan Spiegel clearly hopes it will become a music promotion and curation platform. Here the company attempted to form a partnership with Vevo to integrate music videos and other publisher content into the Snapchat platform, although nothing came of it, as the companies couldn’t agree on a revenue split for advertising. A separate partnership with William Morris Endeavors included promotional music videos and e-commerce integration with iTunes. Spiegel also approached Sony about bringing music to the service, and even considered starting a record label. 

Elsewhere Snapchat has also been working closely with Twitter, which provided engineering expertise to help Snapchat scale up rapidly earlier this year. It’s not clear what form a partnership between Twitter and Snapchat might take, but it’s worth nothing that Twitter has also experimented with becoming a music promotion and curation platform, albeit with scant success.

As the recent launch of Snapcash demonstrates, Snapchat also wants to increase its reach by helping enable a variety of services, for example personal payments between individuals and at retail. This in turn opens up the possibility of location-based advertising as part of its business model -- a move that would mesh with its acquisition of Scan.me and Snap, mentioned above.

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