Ad-free paid-for social network App.net is thriving. Is it the future and what are its implications for social media advertising?
Everyone’s talking about App.net, the new ad-free paid-for social network that is threating to shake-up the current social advertising model as we know it. Founded by Dalton Caldwell, a well-known name on the Silicon Valley circuit, the network charges users to enjoy social networking without ads, rather than the usual advertiser-based free membership model used by Twitter and Facebook. Users initially paid $50 for an annual membership whilst developers paid $100 per year.
The rise of App.net
In July 2012, Caldwell set out his frustrations with Twitter and his reasoning behind the network’s creation.
He said: “Perhaps you think that Twitter today is a really cool and powerful company. Well, it is. But that doesn’t mean that it couldn’t have been much, much more. I believe an API-centric Twitter could have enabled an ecosystem far more powerful than what Facebook is today. Perhaps you think that the API-centric model would have never worked, and that if the ad guys wouldn’t have won, Twitter would not be alive today. Maybe. But is the service we think of as Twitter today really the Twitter from a few years ago living up to its full potential?”
The blog post was viewed by over 80,000 people within one week and led to a later post that set out an ‘audacious proposal’ for a network that includes “a polished native iOS app, a robust technical infrastructure currently capable of handing ~200MM API calls per day with no code changes, and a developer-facing API provisioning, documentation and analytics system.”
The social network has enjoyed positive column inches and popularity since it first started drawing attention in 2011 and, according to a statement from Caldwell in early October this year, App.net has nearly surpassed the 20,000 user level. Now the paid-for network is going from strength to strength, signalling that he’s not the only social user wanting an ad-free option. In August this year, App.net reached its $500,000 target via similar funding campaign to Kickstarter.
During his early discussions, Caldwell announced that the original pricing model and goal for hitting a ‘critical’ mass was 10,000 paying customers and, as of his October blog post, confirmed that this has been well and truly smashed. Since lowering its subscription prices membership has snowballed, gaining over 1,000 new users within a day of the change.
In the same October post, Caldwell announced a drop in member price to $36 per year, as well as the introduction of a $5 per month payment plan. For its developers, App.net launched a Developer Incentive Program that financially rewards those that develop ‘great’ App.net applications. “As the platform matures, and the community and app selection grows, we believe that the value and appeal of App.net can only increase. Remember: we are just getting started,” he said.
Consumer taste
So does the growth of App.net signify a change in consumer appetite away from the present glut of advertiser-heavy newsfeeds towards paid-for networks? Is a shift about to take place just as brands are getting serious about factoring social networks into their marketing budgets?
Jonny Rosemont, head of social media at DBD Media, says: “There is certainly some appeal to App.net, especially amongst social media users who have found that other social networks’ approach come across as too commercially aggressive or unconcerned about user privacy. That said, I’m not sure about the level of this type of disenchantment because the vast majority of users continue to value and use Facebook et al, with global usage continuing to grow at an impressive rate.”
Luke Brynley-Jones from Our Social Times adds that member numbers must be taken with caution, with many of App.net’s current users being early adopters and supporters, rather than genuine consumers.
He says: “If you looked at Pinterest's early usage in the UK, it was disproportionately male and techie, which just shows how early user data can be deceiving. I do feel there is a market for a paid, ad-free short messaging service, but I think the big opportunity is for the thousands of entrepreneurial app developers that Twitter made redundant when it culled the majority of its 3rd party apps last year.”
Advertising affect
But what would such a shift mean for advertisers if they cannot contribute to the network in the usual fashion? Justin Bowser from HTK Horizon believes that there will always be a place for advertising but in the case of App.net, it will be less about paid “interruption” and more consumer led.
He says: “Brands are already looking at ways to develop more meaningful relationships with their customers – which ironically was the B2C promise of Twitter and Facebook – and any meaningful relationship needs to be built on trust. That means a two-way, transparent exchange. Less cookie tracking and re-targeting, less social graph hijacking.”
Rosemont adds that whilst App.net explicitly doesn’t welcome advertisers as part of its service, that’s not to say that brands, businesses or organisations can’t be involved: “Participation would probably need to go down the engagement and development routes – something based on genuine interest. Conversely, however, for a business to invest, it would need to ensure enough of its audience is there to justify any costs,” he says.
So does this advertising-free model have a future and does that future pose a threat to Twitter and Facebook?
Steve Pole, CTO at Alchemy Social, believes the network will increasingly compete with the big two: “As they have already demonstrated, App.net has attracted a passionate group of technically minded people who value open API features and pay driven models over those that are ad-supported. As both Twitter and Facebook move to further monetise their audience they will need to be careful to keep their advertising relevant and consistent with the organic content experience.”
Jeremy Waite, head of social strategy at Adobe, concludes: “Dalton Caldwell's idea to scale an ad-free network where user experience is a priority is to be admired. Social media platforms are sometimes accused of viewing advertisers like their customers and users as the product. However the proposition from App.net, of charging $36 to access an ad–free platform is not a compelling enough offer to threaten the likes of Facebook and Twitter.
“20,000 sign up's in the first two months shows that Dalton's model has merit, but the moral of this story serves to remind social networks that their users (and their experience) should always be the top priority.”
What do you think of the rise of App.net? Is it a credible threat to Facebook and Twitter – and is it something advertisers should worry about?
