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The Almighty Buck Businesses

Why Snapchat and Its Ilk Face a Revenue Conundrum 104

Posted by samzenpus
from the show-me-the-money dept.
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."
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Why Snapchat and Its Ilk Face a Revenue Conundrum

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  • by mpicker0 (411333) on Monday December 23, 2013 @11:11AM (#45766745)

    ...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

    So, Snapchat's wild success is from people paranoid of the NSA who use it to send messages, even though multiple [slashdot.org] stories [slashdot.org] have appeared about how Snapchat messages can be saved without the sender's knowledge, and Snapchat's own website [snapchat.com] lists conditions under which messages will be preserved. Riiiiight.

    ...it doesn't store user information on its servers

    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.

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