One year after launching, Snapchat+ has reached 4 million paid users. That’s up from 3 million in April, 2 million in February, and 1 million last August. This validates the potential for paid social subscriptions, as well as Snap’s specific formula, which includes paid perks for power users (more on that in a bit).
Given a $3.99 per-month price tag, Snapchat + has added $191.52 million to Snap’s annual top line (less promotions and discounting). This is marginal but meaningful for a company whose ad revenue is around $5 billion. Moreover, it’s a move towards diversification at a time when ad revenue is under fire.
Those ad revenue headwinds include privacy – both public-sector legislation and private-sector platform restrictions. Challenges facing ad-supported businesses also include an economic downturn, which tends to retract brand ad budgets. Lastly, the supply side is more saturated these days, given TikTok.
Add it all up and the timing is not only right for subscriptions like Snapchat+, but Snap’s execution has been on target. Indeed, the same success hasn’t been seen from competing efforts like Twitter Blue. Among other things, this means Snap has found the right product/market fit and feature set.
VIP Treatment
So what does that feature set look like and what’s the value proposition for new 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 VIP-like perks, such as being able to get early access to new features.
Other highlights 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 folks, it’s well worth a few bucks per month.
But the most notable feature may be “sticky” above-the-fold comments on others’ Stories. Their comments float right to the top. So in crowded message threads for celebrity Stories, Snapchat power users and pop-culture junkies may gladly hand over $3.99 per month to get above-the-fold exposure.
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’s feature mix – and its 4 million subscribers – is the score to beat for social app subscriptions.
Cracking the Code
Stepping back, there’s been an ongoing question in the tech and media worlds over the past decade: Will consumers pay for content? After the internet age unlocked previously-paid content, such as news, one argument is 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 cracked the code on 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. 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. We can add social apps to that list, with Snapchat+ as the template. We predict others will follow in its wake, and feed into the market demand that it has validated.
