> Why are we so obsessed with the ads model. Why not start charging?

Short answer: Metcalfe's law. "Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2)." [1]

Social networks are valuable to the extent that the people you want to talk to are on it. Charging raises a huge barrier to entry, making it very hard to create a large network.

They could try charging by usage, as with SMS, but that's hard when key competitors are free. They could also try charging for premium features, but that could hurt user growth and it's tricky to find the right basket of features that will really get people to pay.

[1] https://en.wikipedia.org/wiki/Metcalfe's_law

> Charging raises a huge barrier to entry, making it very hard to create a large network.

Is this because digital payments are cumbersome, or are people really unwilling to drop 50 cents/mo on something they find valuable?

Imagine getting 3 months of Snap usage for free, and having the ability to make a 50 cent payment as easy as dropping two quarters in a tip jar. Would this still be a huge barrier to entry?

There is not a chance in hell I would pay to put a photo on Snapchat, and I’m of their core demographic that can actually afford to.

Would you pay $1 a month to not see ads and not have your data be sent to third party companies?

That's not really a winning value proposition. The first part won't resonate broadly; the bulk of America is perfectly comfortable seeing ads. And the second part raises a question they desperately don't want to raise: what are big companies doing with all that personal data?

To add - earlier WhatsApp and other messaging was seen by most adopters as a free SMS replacement.

Nobody is preventing them from offering either ads OR a subscription service.

Hey if they discover it too late, that’s on them!

At their size, there are few changes that will help user growth without improving content.... goood luck with that.

1. Snaps core demo likely doesn’t have the discretionary income to pay for a social network.

2. Snaps main competitor would have a far lower barrier to entry - free

3. If all your friends can’t pay for Snap, you will likely move regardless if you are a paying customer. Why would I pay for a network with 80% of my friends when I can use a near clone with 100% of my friends.

4. Facebook nearly $7/user a month with an ad model. Ads are fare more lucrative than subscriptions

Snap's ARPU is about $1 per quarter. Surely the core demo can afford even a 100% markup on that?

My problem with any ad model is it incentivises the maximisation of views/engagement that allow for more/stickier ad impressions which means a proliferation of viral/tabloid/divisive content like youtube/snap/facebook. Once that incentive can be minimised, the incentive to provide quality product that users then feel willing to pay for can become more important.

Of course, these networks didn't attract the user numbers they have by charging up front so for any challenger to come along and try this model will be extremely difficult due to the aforementioned friction in either getting out your credit card to pay or paying up front for an app. People will gladly shell out hundreds of dollars for a new phone but won't shell out a fraction of that for a quality app on that phone.

Lets skip the fact that a your average 17yo may not even have a credit card to begin with.

If Snap were to start charging tomorrow, what would their value ad / sales pitch be?

The original reason people used Snap was ephemeral communication with their friends. Snap can't "sell" that. If I buy the Snap App, and my friends aren't there then the app is useless to me. The smaller the network is, the less valuable it is to me - and if I do buy in, it then becomes my job to also convince my friends that Snap is worth is paying for. If one of my friends does not renew their subscription, the value of the service to me also declines. I don't think any social network can be viable by subscription - the most valuable part of a social network is the network, and the under a subscription fee, "Snap" would always have to choose between making the network for valuable and generating revenue.

Thats why the ad model works so well for social networks. The more people you have, the more attractive it is to consumers as well as advertisers. This is different from something like a news publisher - the amount of people also reading from that same publisher doesn't affect my enjoyment of their content.

How do you get a 12 yo to pay for anything, especially when Insta is free and does much of the same stuff?

The second they charge, 75% of users go to Instagram and don’t come back.

> Snaps core demo likely doesn’t have the discretionary income to pay for a social network.

How valuable are a demographics with no discretionary income to advertisers?

Here’s an example,

This year I want a [blank] from Santa/father Christmas.....

I want a Snap Spectacles for Christmas!

> I am sure people wouldn't mind paying a certain amount per year to keep using the app without creepy apps.

What makes you so sure? Given that there are basically no successful social networks that charge, I'm very skeptical.

It’s a figure of speech, but my guess is based on the amount of money people pay for game apps.

There seems to be a social convention that has formed around social media products that the user should never have to take out their credit card and actually pay. It makes sense why it started this way, since network effects are everything in this space.

But like many things that start one way for a good reason, that reason is eventually forgotten and the state of the world is codified into a shared social norm. Most people either don't care or are unfavorable to social media sites selling their info, yet I predict the outcry towards their charging would be enormous.

I'm also unsure about the userbase. It seems like the average Snap user is very young. Paywalling the app will probably drastically increase the barrier for people to use the app.

Snapchat is already losing people because Instagram is copying their core features. Charging money will just cause people to leave to Instagram even faster.

> This is not a web app, where you have to take out your wallet and enter your CC info; all it takes is the scan of your fingerprint.

But you need a CC to begin with. What percentage of Snap’s user base has a CC?

> I am sure people wouldn't mind paying a certain amount per year to keep using the app without creepy apps.

I really don't think this is the case. For the demographic that currently uses Snapchats (mostly 18 to 24 year-olds), paying for mobile software at all is a pretty significant behavior change.

It doesn’t have to be subscription or pay to download. You have the user looking at your App 12 hours a day. Be innovative on how to extract money from them.

Where are you getting your demographic info for SNAP from?

Humans really don’t like to pay for stuff.

ad buyers are also consumers.