Why Snapchat is the next Myspace
Picture chatting apps are on the rise and here to stay, but Snapchat’s forays into monetization will expose them as a fad.
Snapchat is raising $100 million at close to a $1Bn. valuation. An incredibly risky move, since it closes off many potential acquisition options for them, as there are very few companies willing to pay over $1 Bn. for a consumer startup with no revenue. This indicates that Snapchat believes they are creating a lasting business and are going to be shooting for an exit through IPO. The only way a consumer startup can raise such a huge amount at that kind of valuation when it has absolutely no revenues at all is by promising investors that their users will convert into money. Snapchat is banking on a “revolutionary” new business model: advertisements.
Taco Bell (and O2 in the UK) just confirmed their Snapchat “corporate” accounts. This gives us a clear indication that Snapchat is promising brands the ability to send messages to their users. This could be in the form of self destructing coupons or just one off promotions. Although this may seem like an attractive take on advertising to investors, the reality is that teens are fickle. The minute they feel that their favorite app (read: personal space) has been “corrupted” with ads, they will jump ship. Teens who have grown up as digital natives tend to take a different view of ownership. They believe that possession comes from usage and attention rather than from financial transactions.
People have now started complaining about getting spam on Snapchat. With the introduction of offers from brands and adverts it will only intensify the problem.
This all reminds me of another early social networking fad: Myspace. Myspace offered teenagers the ability to be themselves online. They could express themselves through music, images, and everything under the sun. The biggest factor in Myspace’s downfall was that it was littered with advertisements, ranging from spammy user messages and comments, to glittering and loud displays to top brands advertising their wares all on one giant cluttered ugly portal.
Snapchat is now on its way to becoming the next Myspace by opening their doors to a wave of spam and adverts.
Impermanent photos aren’t what’s attractive about Snapchat. It is the ability for users to use photos (and short videos) to express themselves and communicate in a new way. However with Snapchat going the way of Myspace, and nothing to keep users there (no saved memories) their permanance will be as fleeting as their photos once the next best thing catches on.