Less than 3 months after reaching 4 million paid users, Snapchat+ has crossed the 5-million mark. This validates the potential for paid social subscriptions. More importantly, it offers a lesson in product/market fit. Snapchat+’s feature mix mostly includes paid perks for power users (more on that in a bit).
Quantifying this milestone, Snapchat+ has added about $240 million to Snap’s annual top line, given a $3.99 per-month subscription. At about 5 percent of Snap’s total revenue, this is marginal but meaningful in that it represents a move towards diversification at a time when ad revenue is under fire.
Those ad revenue headwinds include privacy reform – both legislative 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. Comparatively, the same success hasn’t been seen from competing efforts like X Premium (formerly Twitter Blue). This means Snap has found the sweet spot for paid social features.
Ep. 11 Examines BigTech’s Old Shiny New Thing — Subscriptions
The Score to Beat
So what does that feature set look like and what’s the value being offered to subscribers? It’s mostly exclusive VIP-like perks, such as access to new features on Snapchat. And the price is right. At $3.99 per month, it seems to strike the right value exchange for Snapchat power users… 5 million of them.
Meanwhile, a main selling point is detailed analytics on published Stories. With this, subscribers can see who rewatched a given story… a real attraction for influencers and brand marketers that wish to optimize content or re-retarget audiences. Given these high stakes, a few bucks per month can be a steal.
Another fan favorite is “sticky” above-the-fold comments on other Snapchat users’ Stories. In other words, comments float right to the top. So in crowded message threads for celebrity Stories, some Snapchat+ subscribers (think: pop culture junkies) gladly hand over $3.99 per month for this exposure.
To further sweeten the deal, Snap continues to infuse fresh 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 5 million subscribers – is the score to beat for social app subscriptions.
Model Citizen
So what does this all mean in a broader sense? There’s been a looming question in the tech and media worlds: Will consumers pay for content? After the internet age unleashed previously-paid content such as news, one argument is that you can’t put the genie back in the bottle. And that’s not untrue.
At the same time, 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, a few players have cracked the code, such as the New York Times and Wall Street Journal. In fairness, these are premium content products which is one pre-requisite for a paid content model. But the lesson stands either way: There’s been a clear shift away from ad support, or at least diversification.
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 model citizen. Others could follow its lead, looking to soak up the market demand it has validated.
