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by randoman
3141 days ago
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Snap's ARPU is about $1 per quarter. Surely the core demo can afford even a 100% markup on that? My problem with any ad model is it incentivises the maximisation of views/engagement that allow for more/stickier ad impressions which means a proliferation of viral/tabloid/divisive content like youtube/snap/facebook. Once that incentive can be minimised, the incentive to provide quality product that users then feel willing to pay for can become more important. Of course, these networks didn't attract the user numbers they have by charging up front so for any challenger to come along and try this model will be extremely difficult due to the aforementioned friction in either getting out your credit card to pay or paying up front for an app. People will gladly shell out hundreds of dollars for a new phone but won't shell out a fraction of that for a quality app on that phone. |
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If Snap were to start charging tomorrow, what would their value ad / sales pitch be?
The original reason people used Snap was ephemeral communication with their friends. Snap can't "sell" that. If I buy the Snap App, and my friends aren't there then the app is useless to me. The smaller the network is, the less valuable it is to me - and if I do buy in, it then becomes my job to also convince my friends that Snap is worth is paying for. If one of my friends does not renew their subscription, the value of the service to me also declines. I don't think any social network can be viable by subscription - the most valuable part of a social network is the network, and the under a subscription fee, "Snap" would always have to choose between making the network for valuable and generating revenue.
Thats why the ad model works so well for social networks. The more people you have, the more attractive it is to consumers as well as advertisers. This is different from something like a news publisher - the amount of people also reading from that same publisher doesn't affect my enjoyment of their content.