Whatever you think of the sky-high valuations of Snapchat, its need to start proving it can make money from those 350m snaps shared every day is clear. According to Spiegel, the desire has been there from the start.
“We didn’t think we were ever going to raise venture capital so we were planning very early on to generate a revenue plan,” he told TechCrunch in , although a few months later he was espousing a familiar startup line: “In the grand scheme of priorities, reaching scale is more important.”
“In-app transactions will come first. We think we can build really cool stuff people want to pay for. The app is now a part of everyone’s day-to-day lives. That means that they will – I at least would – pay for a more unique experience,” he added in .
“Going forward there are lots of different revenue models. One we talk about is in-app transactions (selling extra content or features within the Snapchat app) because we don’t have to build a sales team to make cool things that people want to pay for,” Spiegel told Associated Press this month.
So-called “native” advertising – ads that look like other content on the service – may play a role too, just as it’s starting to do on Instagram. Brands including Taco Bell are already using Snapchat to communicate with customers, without paying to do so.
Not everyone is convinced that this will work. Roy Murdock’s blog post, again: “You’ve developed an application that people want, and if you try to change it through any type of monetisation scheme you’ll end up with an application that people don’t want,” he wrote, addressing Snapchat’s CEO.
9. . including figuring out how to make money
“Basically, Snapchat is not going to resort to native advertising (see Facebook) until it has no other choice. Everyone hates it and Snapchat knows it will drive people away from the service and build resentment towards the brand . The moment they start to annoy their users with subscriptions or obtrusive ads, users can easily switch to another service or simply stop using Snapchat.”
10. The competition is gathering
Users switching to another service is the big threat hovering over Snapchat for the year to come, and it revolves around the sense that a buzzy social app is only ever one or two missteps away from a rapid user drain to its rivals.
There’s WhatsApp and Kik on the messaging side, along with a (possibly) renascent BBM – not to mention Line, KakaoTalk and WeChat, which have big ambitions to expand beyond their home markets in Asia.
There’s Facebook Messenger, the possibility of Twitter doing more with direct messaging, and a constant flood of new social apps jostling for the attention of teenagers in particular, from Frontback and Context through to Bieber-backed selfies-sharing app Shots of Me.
In 2014, Snapchat faces the challenge of keeping its cool factor with improved features, raising more money to cover its costs while it searches for stable revenue streams, and continue to deal with the inevitable controversies that come the way of any social startup with a heavily-teenage user base.
A later filing expanded the lawsuit to Snapchat’s investors, and cited Google chats and emails in an attempt to show that Brown was a co-founder, as well as a text message from Spiegel’s father to Brown’s mother referring to the three students working on their startup together.
Ephemerality is the key to that, not sexting, and Snapchat has made an effort to hammer that point home, publishing an essay by researcher Nathan Jurgenson on its blog in that spelled its philosophy out:
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