Landscape of the Social-Audio Apps: Clubhouse and Its Many Competitors
Will people still “drop-into” conversations when we’re no longer stuck at home?
Below is an adapted expert of a group project I did for the Quantic MBA program. Specifically, I wrote about the current states of Clubhouse and the social media industry landscape with a focus on social-audio apps. Sharing this for anyone interested in Clubhouse, the social-audio realm, or curious about what you do for an unconventional MBA program.
Industry Background
The social media industry has grown rapidly in the 21st century. According to Pew Research, over 72% of Americans use some types of social media, compared to 5% in 2005 (Pew Research Center 2021). Although young adults are still the primary users, overtime, the demographic has become more representative of the actual population. In addition to the huge user base, social media users tend to be active users too. For example, 80% of Instagram users and 73% of Twitter users use the respective apps at least once a week. According to Vault, the industry revenue is expected to reach over $50 billion by 2021 (Vault 2021). Compared to traditional industries, the barriers to entry are relatively low for products like Clubhouse. This means there are likely to be similar players in this field.
At the same time, there have been more regulations concerning user privacy, notably GDPR, which went into effect in 2018 and limited how and what data companies can collect from internet users. Social media companies have also been criticized for enabling the spread of misinformation and ineffective moderation as a result of its nature of openness. This caused controversies from the public and negatively affected the overall reputation of social media companies. In fact, a 2020 research found that 64% of Americans found social media to have a mostly negative influence on the country (Auxier 2020). These are challenges all social companies need to take into account as they grow.
Competitive Analysis
- Facebook is the leading player in the social media market worldwide (Statista 2021). In May 2021, it accounted for more than 70% of the entire U.S. social media site visits. The most popular demographic background of Facebook users is aged 25–34. In April 2021, Facebook announced that it will first test “Live Audio Rooms” in Facebook Groups, meaning it will be available to its 1.8 billion users currently using Groups (Figji 2021). This is directly comparable to the current Clubhouse model, where users gather in a group based on topics. Facebook also plans to make this function available to “public figures”, citing well-known musicians and Olympians as examples. Additionally, Facebook plans to bring the audio experience to Messenger, its chat app. One thing Facebook made clear in its statement is how monetization would work for creators: listeners can buy and send creators “Stars”, and Facebook pays the creator $0.01 per star. Facebook also introduced “Audio Creator Fund” to support upcoming audio creators.
2. Twitter is another main player in the social media arena, with 397 million active users worldwide as of July 2021 (Statista 2021). Twitter “Space” launched December 2020 as “a small experiment focused on the intimacy of the human voice” and had since added more functions. Twitter accounts with 600 followers or more can start a space. To make monetization possible, Twitter is working on “Ticked Rooms”, for which the hosts can set the price and numbers of tickets (Twitter 2021).
3. Less “social-media” in nature but still worth noticing is Slack’s “Huddle” (Slack 2021). As of 2020, Slack has 10 million users (Curry 2021). This is an interesting case due to Slack’s focus on enterprise customers, and Huddle could be viewed as an early experiment to test how audio interactions turn out in business settings. Salesforce recently acquired Slack, which will give Slack further advantage in regards to enterprise markets because of Salesforce’s existing customer base.
Let’s take a closer look at Clubhouse
A SWOT analysis, as one does for MBA.
Strengths: Clubhouse currently remains the go-to name for audio-first social media apps. As of May 2021, Clubhouse has over 10 million weekly active users (Dean 2021). Until Clubhouse, audio-centered live social interactions have not caught much attention widely. Clubhouse’s popularity is proof that there is a need for the contents of such formats. For a longtime, Clubhouse only accepted new user registrations based on invitations, so it was easier to maintain the quality of user accounts and avoid bots. The invited users are likely to be early-adopters of technology products in general and can act as evangelists for the product itself.
Weaknesses: Currently, Clubhouse does not have a clear revenue model. It has a tipping system where 100% of the income goes to the content creators. It has not been viewed as a scalable advertising tool like other social media platforms. It is also unclear if the current growth is driven by the artificial exclusiveness of the invite rule, the celebrity effect, or just temporary curiosity of the product itself. Clubhouse still needs to prove that it is able to attract users after the newness wears down.
Opportunities: Clubhouse is a unique brand that has attracted its own user base and provides a platform for new content creators. Compared to more mature social media apps, Clubhouse is still quite “lightweight” in terms of its core functionalities. This gives Clubhouse more freedom to explore new products and business opportunities without being tied down to legacy work. With Clubhouse recently becoming available on Android platform and ending the invite-only registration mechanism, there is possibility for fast growth in the user base.
Threats: The core functions of Clubhouse are easy to be cloned, and some arguably have advantages over Clubhouse. For example, Spotify’s Greenroom aims to use its existing personalization function to recommend topics that will most interest users. Other companies like Facebook and Twitter also have the advantage of having built a huge user base, which means more data to engineer on. This requires Clubhouse to find ways to differentiate itself from the fierce competition.
Clubhouse has faced problems in terms of content moderation: users have reported racism and antisemitism content (Huet, Ford 2021). As social media companies face more scrutiny regarding the responsibility of reliable information, Clubhouse has to address this problem as it grows or ignores at its own peril.
References
- Auxier, Brooke. “64% of Americans say social media have a mostly negative effect on the way things are going in the U.S. today.” Pew Research Center, October 15, 2020. https://www.pewresearch.org/fact-tank/2020/10/15/64-of-americans-say-social-media-have-a-mostly-negative-effect-on-the-way-things-are-going-in-the-u-s-today/.
- Clubhouse: The Social Audio App. Retrieved on August 20, 2021. https://www.joinclubhouse.com
- Curry, David. “Slack Revenue and Usage Statistics (2021).” Business of Apps, May 6, 2021. https://www.businessofapps.com/data/slack-statistics/.
- Dean, Brian. “How Many Users Does Clubhouse Have? 40+ Clubhouse Stats.” May 10, 2021. https://backlinko.com/clubhouse-users.
- “Introducing Slack Huddles, a new way to have live audio discussions”. Slack, n.d. https://slack.com/help/articles/4402059015315-Introducing-Slack-Huddles-a-new-way-to-have-live-audio-discussions.
- Huet, Ellen. Ford, Brody. “Clubhouse’s Founder Is in a State of Perpetual Motion”. Bloomberg, Mar 16, 2021. https://www.bloomberg.com/news/articles/2021-03-16/who-made-clubhouse-app-paul-davison-a-founder-in-perpetual-motion
- “Leading social media websites in the United States in May 2021, based on share of visits.” Statista, June 17, 2021. https://www.statista.com/statistics/265773/market-share-of-the-most-popular-social-media-websites-in-the-us/.
- “Most popular social networks worldwide as of July 2021, ranked by number of active users(in millions).” Statista, August 2, 2021. https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/.
- Simo, Figji. “Be Heard: Bringing Social Audio Experiences to Facebook.” Facebook, April 19, 2021 https://about.fb.com/news/2021/04/bringing-social-audio-experiences-to-facebook/.
- “Social Media Fact Sheet”. Pew Research Center, April 7, 2021. https://www.pewresearch.org/internet/fact-sheet/social-media/
- “Social Media: Overview”. Vault, n.d. Accessed August 20, 2021. https://www.vault.com/industries-professions/industries/social-media.
- Twitter Spaces. “Spaces is here, let’s chat.” Twitter, May 3, 2021. https://blog.twitter.com/en_us/topics/product/2021/spaces-is-here.
