There’s been an ongoing lingering question in the tech and media worlds over the past decade: Will consumers pay for content? After the internet age unleashed previously paid content, such as news, one argument holds that you can’t put the genie back in the bottle. And there’s some truth to that.
Meanwhile, the privacy-first era has cracked down on the previous decade’s unfettered expansion of ad tech. This has caused the pendulum to swing back toward paid content, with the message that you can pay with your wallet rather than your data… though there’s some evidence that this is misguided.
Still, some outlets have achieved decent traction with paid digital content, such as the New York Times, Wall Street Journal, and others. Admittedly, these are premium content products so a paid content model requires some conditions to work. Regardless, there’s been a shift from ad support to a certain degree.
Beyond news content – and paid access to entertainment like iTunes and Spotify – we’re seeing positive signals in other types of paid experiences. And one company that’s shining a light on best practices is Snap. Its Snapchat+ premium tier continues to lead the way in user traction and revenue.
The Right Mix
Validating that lead, the latest Snapchat+ milestone was announced at last week’s Snap Partner Summit. Specifically, Snapchat+ has reached 3 million paid users. That’s up from 2 million in February and 1 million in August – indicating not only healthy user growth but accelerated adoption.
Doing the math, at $3.99 per subscription this has brought Snap an incremental 12 million in top-line revenue. This isn’t terribly consequential for a company whose annual ad revenue approaches $5 billion. But it’s a move towards diversification at a time when ad revenue is under fire from privacy reform.
Beyond that specific challenge – including public sector legislation and private sector platform restrictions – other headwinds face ad-supported businesses. Those include an economic downturn, which tends to retract brand ad budgets, and an increasingly fragmented supply side (read: TikTok).
Add it all up and the timing is not only right for an emerging subscription product like Snapchat+, but the execution has been on point. Indeed, the same success hasn’t been seen from competing efforts like Twitter Blue. This means that Snap has found the right mix of product/market fit, and execution.
Inelastic Price Point
Breaking that down, what are Snapchat+ features and what’s the value proposition for subscribers? As noted it costs $3.99 which seems to strike the right inelastic price point for Snapchat power users. For that, they get a mix of exclusive Snapchat perks, such as being able to get first access to new features.
Other features include deeper analytics on published Stories. For example, subscribers can see who rewatched a given story, which can be valuable for Snapchat influencers and brand marketers that want to optimize content or retarget audiences. For these personas, it’s well worth $4 per month.
But the most notable feature may be prioritizing comments on celebrity Stories. So within crowded message threads for a given celebrity Story, Snapchat power users and pop culture junkies may gladly hand over 4 bucks per month to get above-the-fold exposure. Their comments float right to the top.
To sweeten the pot, Snap continues to sprinkle on more features such as Snapchat web access, exclusive Bitmoji skins, and UX customizations such as pinning profiles of close friends. Bottom line: Snap has cracked the code on paid social subscriptions and has set the bar. Others take note.
