How Will Clubhouse Make Money
Photo Credit: TechCrunch
It was April 18th. Like most days, I am scrolling Twitter. Liking tweets, replying to a few interesting ones. This day was different. My timeline was peppered with tweets asking for a Clubhouse invite:
I went on Google and searched "Clubhouse". I found it!
Oops, different Clubhouse. Same name, different purpose — enterprise project management software.
The mystery continued. I saw a tweet from TechCrunch reporter, Josh Constine. He published a story titled, "Clubhouse voice chat leads a wave of spontaneous social apps".
He writes,
Clubhouse, an audio-based social network where people can spontaneously jump into voice chat rooms together, you see the unlabeled rooms of all the people you follow, and you can join to talk or just listen along, milling around to find what interests you. High-energy rooms attract crowds while slower ones see participants slip out to join other chat circles."
The app has taken off like wildfire (in the Silicon Valley Twitter community). Andreesen Horowitz, the famed VC firm, invested $10MM in the app. People are declaring, "Audio Networks as a Service" as the next big social network wave.
Nathan Baschez does a good job of explaining Clubhouse from a user perspective,
One afternoon I got a push notification saying that Paul [founder of Clubhouse] was talking to Naval Ravikant ... So, when I got that notification that Paul and Naval were talking, I had a few minutes, and I decided to join. As soon as I did, Paul recognized me and said something like, “Hey Nathan! I saw you wrote a post about Roam the other day, we were just talking about that. We’d love to get your take on it.” And then he invited me to speak. All of a sudden, I’m explaining my dinky blog post to a guy with almost a million twitter followers!
Two big questions remain:
How will the app monetize?
Why will ordinary people use it?
How Will the App Monetize?
Clubhouse's magic is in creating intimate, ephemeral conversations. Groups of people can come together to talk about anything. It's SoHo house on your phone.
The problem with exclusivity is that it isn't scalable. Once everyone is using it, it loses its utility value. As Chris Dixon writes, "Come for the tool, stay for the network."
What tool is Clubhouse providing? As far as I see, none. But that can change. Clubhouse can become a white-label solution for content creators and influencers.
Fans feel connected to influencers. As I wrote previously in, “Quibi Can Turn It Around By Doing This":
The data backs this up. 70% of teenage YouTube subscribers say they related to YouTube creators more than traditional celebrities ... 40% of millennials believe their favorite creators understand them better than their friends.
Why Will Ordinary People Use It?
First, fans wanted to follow their favorite influencers. Facebook, Twitter, and Instagram enabled that. Now you have a new generation of tools. Tools like Cameo, OnlyFans and Clubhouse (potentially), where influencers can interact with their fans. Not just follow an influencer’s life, but be a part of their life.
Kim Kardashian as a Case Study
Kim Kardashian is the queen of influencers. Currently, she has:
178M Instagram followers
65M Twitter followers
29M Facebook likes
Companies will pay hundreds of thousands of dollars for sponsoring her social posts. Her brand, KKW Beauty, has a valuation of $1B.
It suffices to say she has a loyal following. What if she told her fans that they could join her "private club"? Once a week, her most dedicated fans would hear her talk. It's fleeting, authentic and epitomizes FOMO. How much would a fan pay to say, "I'm part of Kim's club?"
A lot!
Don't take my word for it. OnlyFans is already doing it with adult performers. It's estimated the company will take home $150MM - $300MM in revenue this year. Think of Clubhouse as OnlyFans for creators.
To paraphrase Freud, porn or war is where innovation begins.
Ephemeral, exclusive content is beginning to take center-stage. Clubhouse has the opportunity to be the winner.
Thanks to Eric Ruleman, Peter Martin and Kyle Bowe for reviewing drafts of this.
Disclaimer: I haven’t used Clubhouse.