Slashdot Mirror
Why Snapchat and Its Ilk Face a Revenue Conundrum
Nerval's Lobster writes "Snapchat managed to attract a lot of buzz in 2013—perhaps more than any other app on the market—and it's easy to see why: in these paranoid times, with the NSA allegedly sniffing around the world's collective inbox, and lots of software on the market designed to snoop into people's lives, it's comforting to have an app that'll vaporize your messages within seconds of their opening. Snapchat's executives see the startup's future as so bright, in fact, that they reportedly turned down a $3 billion buyout from Facebook. But whether Snapchat eventually accepts a buyout offer, or tries to parlay its popularity into some sort of IPO, it faces a rather unique problem: how do you make money off a free app that near-instantly vaporizes all content? Snapchat could emulate enterprise-centric vaporizing-message firms such as Silent Circle and start charging for subscriptions, but that would probably kill the service; a multitude of free rivals would likely spring up, with the express purpose of stealing irate customers away. More likely, Snapchat will probably launch some sort of display ad system, similar to what Facebook and Twitter have now—but given how it doesn't store user information on its servers, it'll probably be hard to monetize its users as extensively as those social networks. With that in mind, Snapchat might be left with two options going forward—either expand its services in a radical new (and more profitable) direction, or sell to a Tech Big Fish for a whole lot of money."
... should have taken the offered cash and start a new venture, producing more in long term value.
Fixed it for you
but, given how it does store user information on its servers, it'll probably be easy to monetize its users as extensively as those social networks.
Why the obsession with money? Seriously.
Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?
An enigma, wrapped in a riddle, shrouded in bacon and cheese
"how do you make money off a free app that near-instantly vaporizes all content?"
The annual payment you're getting from the NSA to make sure they're permanently on the cc list?
-Styopa
Really, who cares if they can make money or not? That wasn't the whole point of Snapchat. Hell, it's not the point of 99% of tech companies these days. The point is to be bought by somebody else, not to make profit. Making profit is hard. Convincing some deep-pocketed sucker to buy you out is much easier.
I don't respond to AC's.
TFA answers its own question. You go IPO or sell the company to some other sucker for billions, then you are set up for life and can do what the hell you like. Making money is someone else's probably, your only goal is to look valuable because you have x billion cattle, sorry users, that someone might one day figure out how to milk.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Nut said.
You are what you eat!
Nut said.
You are no better than the company you keep!
Nut said.
You are much less of a person than you believe!
Nut said.
They may not store the image itself, but I don't see anything stopping them from storing information describing the image.
Ummmm, how about show an ad first, then allow them to see the snapchat afterwards. No choice but to watch ad if you want to see that nude.
It's a precurser to a future stock market, where buyers invest their money, the corporation's stock skyrockets, then crashes, and the money disappears without a trace.
Gently reply
How is the content exchanged on Snapchat any more ephemeral ("vaporized") than a phone call? Or isn't it? Just because it's "vaporized" from your perspective doesn't mean it wasn't captured *somewhere*.
More likely, Snapchat will probably launch some sort of display ad system, similar to what Facebook and Twitter have now—but given how it doesn't store user information on its servers
They may make a point of not storing the images on their servers, but what's to stop them storing information on users? For that matter, what's to stop them displaying non-targetted ads?
it faces a rather unique problem: how do you make money off a free app that near-instantly vaporizes all content?
It sounds to me more like it faces a rather imaginary problem made up by the writer of the article.
systemd is Roko's Basilisk.
They will regret that, if they don't already. Tech moves so fast, people get tired of one thing and move to the next. They should have sold when they had the chance.
Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?
If you are not making money, you can't pay for the infrastructure, help, taxes (like property taxes that you have to pay regardless of your profitability), and other expenses of running the firm - let alone paying yourself so you can pay for rent, food, healthcare, student loans, etc ....
As far as them not taking the 3 billion, that's because they haven't planned and their hubris in thinking that, some how, they can make more on their own.
So, Snapchat's wild success is from people paranoid of the NSA who use it to send messages, even though multiple stories have appeared about how Snapchat messages can be saved without the sender's knowledge, and Snapchat's own website lists conditions under which messages will be preserved. Riiiiight.
Even assuming it doesn't store images (which it does, see above), to use the application, you connect with people as in any other social networking application. This is definitely "user information," and this metadata (some might even call it data) has value.
I tweeted about a snapchat of myself playing farmville. Fame and fortune are sure to follow.
The question is not "How can a site make money?", but "how do I prevent a nice site to be bought by an evil company?"
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
Why the obsession with money? Seriously.
Because money is important for reasons that should be self evident and having more of it can make your life a lot easier.
Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?
Because the amount of money you can charge for something is a pretty useful proxy for how much it is valued by society once you take scarcity (real or artificial) into account. Furthermore if people are willing to pay a lot for something that means there are potential opportunities to earn a living providing that something. Since we all have to earn a living it is probably in our interest to pay attention to what is likely to be profitable and what is not.
They should have taken the $3 billion and run with it.
SnapChat only works as long as it doesn't need to make money. Once advertising comes in, advertisers will be calling the shots, because they are paying the money. They will want to know more and more about users and what they are sending to each other. They'll eventually get what they want.
Remember the pets.com puppet? I'm sure that must have brought in a lot of cash at the bankruptcy proceeding. See, there's lots of ways to monetize internet companies.
I honestly don't understand how snapChat is supposed to work. I can understand the concept of "We make it inconvenient" for someone to get a copy of your picture or text. But the idea that it's gone forever seems preposterous. If the device it is beamed to can display it, then presumably all the information necessary to decode and preserve it is present in the message or in the memory of the device and thus capturable. Not to mention one could just take a picture of the picture. So how are they actually doing it?
Some drink at the fountain of knowledge. Others just gargle.
so it is a new program for smartphones? I thought it was software for webcams. learned something new today.
They can just stick a small ad before or after a picture is shown. If the content is amusing enough, people will click through.
They have to watch out that they don't make it a pain in the ass to bypass the ad. They already know this - not very many people like ads in general.
Snapchat could emulate enterprise-centric vaporizing-message firms such as Silent Circle and start charging for subscriptions, but that would probably kill the service; a multitude of free rivals would likely spring up, with the express purpose of stealing irate customers away.
So, the end-user ends up with two choices
Those new free services will still have a revenue problem. And, if one is better capitalized, then it may buy up it's rivals and have an even bigger revenue problem.
Everyone needs to eat. Servers need power. It costs money to run servers, pay for bandwidth, pay for facilities, and have employees. If a company has no revenue then it is going to fail eventually.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
The only way to make money off of something that ought to just be a relatively trivial implementation of a relatively trivial protocol, is to either trick your customers, or make the implementation worse.
Think from a user's point of view: if you're paying for secure communications, then your communications are probably less secure than that other guy's, who isn't paying. You never ever pay for this kind of stuff. So that makes me wonder how you ever get into the business of trying to sell it. You've got to have a "..and then we fuck everyone" step in your business plan. And if that's your plan, I'm not here to help you.
Every service they provide is a nice-to-have but not an essential necessity that people will pay for. Google and other large tech companies are playing the "tech patron" role, keeping the service running even if there is no monetary rationale for it just because it works as another value-add to the Internet as a whole.
I'll Ilk Anyone Who Says Differently.
Please explain how a legitimate business, which has to answer to the court of public opinion, not to mention the real courts, would be able to monetize blackmail (an illegal activity).
By partnering with people who have no respect for the law....like the CIA, or NSA.
--shiftless (410350)
Folks, they turned down a 3 Billion offer. For something that is trivial to engineer, though the idea itself is somewhat novel. If that is not revenue, I don't know what is. There is no Conundrum here, only Greed.
It was my understanding that it was simply the "honor system" that you don't screenshot the app when it's sent to you.
Note: I haven't used snapchat
What they should be deploying is some kind of system that instantly vaporizes other companies display ad systems before they reach my retina. I'd pay money for that.
Mod up..
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Or why Social Media and web sites just suck.
All this predictable discussion about the economic necessities is just too easy and obvious. Of course you have to pay your bills. The trick is to do that and do some good as a by-product. If the argument you give to your investors is only about maximizing their profit, you and they aren't being creative or good citizens.
I give you an example everything you have ever hated about social media, about Facebook, about Google, about Twitter, about millions of web sites and blogs out there. The people who invent these things are smart, but the applications are lazy and fall short of virtue in a myriad of ways, wihch is why we dislike them, but basically your have your own lack of morals and creativity to thank for that. All those guys here making the same mindless economic arguments, the same tiresome capitulation to the craven shortsightness of bankers and investors, are only admitting their own lack of insight. Now I know that you must justify your effort to your investors, but that should come with limits you shall not cross.
I have become a sharp critic of blogs and social media because they cater to the obvious and lowest nature in people, to appeal to the low hanging fruit and instant gratification of the most base consumerism, and people invest and use complex technical skills, even computer science, in exploitation of this lowest common demoninator in people, this short attention span, this media driven ADD, as though there is some new found source of energy in it, when it is just the collective laziness of mind and ignorance of the pressing and complex problems of the real world. It is as if it is really a pact with the Devil in age-old Huxterism and separation of people from their money.
The promise of the internet was much more, and that opportunity has been taken away by greed, by the mediocraty of the main market and mass consensus. The public taste is not the last word, but society has always had idea leaders, meme creators, who once came out of learned institutions, who led to offer wisdom and insight, because they felt that society needed a guide beyond the short-term economic necessities. Now we have elevated the Huxter, advertiser, the marketer, the public relations person, the propagandist, who are all tellers of white and greater lies, with little criticism, to high status that they have not earned, and all because somebody gets to make a buck. People are tiring of that and ultimately it will show as a loss of revenue to Internet companies as more and more people switch off or find and create alternatives. Good luck, and I hope that many of you are wrong,