Clubhouse – The Audio-Only Platform

Clubhouse is an interactive audio-only social platform. Users can join audio-only conversations like joining a group of people chit-chatting around an actual clubhouse. Once you leave, so does any record of the conversation. This makes for some interesting conversations, but the dynamic on Clubhouse is completely different from any other social media platform. On Facebook, YouTube, Twitter et al, users share their message, which is often relatively short, and then maybe they’ll engage in some shallow dialogue in the comments before moving on to something else. On Clubhouse, though, users will often carry on in-depth, engaging conversations for hours — sometimes even more than a full day. And rather than constantly pitching their products or services, most users are freely and transparently sharing their knowledge to help others achieve their goals.

The unique collaborative nature of social media platform interactions stems from a carefully curated list of initial users. These users were then allowed to send invites to their network and so on and so forth. Because they started with the right people who formed the culture of the platform, and then had those people slowly bring on new users who were indoctrinated into this culture, the result was a powerful and nurturing environment in which participants could gain access to contacts and opportunities that were previously far outside their reach.

Brands are already spending millions in curating communities and tailoring messaging via influencers and social media accounts. This trend of smaller more intimate settings is certainly on the rise in the midst of noisy overcrowded platforms. This is how Clubhouse is creating and capturing value, at least for now. Like snapchats claim to fame, Clubhouse too does not record or provide the ability to rewind any of the conversations. It is almost liberating to many users. This is yet another example of value creation.

However, the points mentioned above cannot be sustainable. For Clubhouse to retain members and maintain the ambitious monthly active user rate, it will have to create and capture more sustainable value.

For now, the app benefits from the presence of celebrities that as one expects, has drawn large crowds to the platform. And since you can only join by being invited, the demand or it’s perception at least, has been driven up significantly. The biggest of these was Tesla founder Elon Musk, whose recent Clubhouse appearance broke the 5,000 person limit for a room, and saw users creating secondary listening rooms and live-streams on other platforms to follow the conversation. Clubhouse has also hosted a live-reading of The Lion King musical, while even Facebook CEO Mark Zuckerberg recently joined a Clubhouse chat – no doubt to take some notes for Facebook’s coming duplicate feature. As the hype has grown, so has the app’s audience, with Clubhouse going from 600,000 active users in December, to 2 million just over a month later. It would be interesting to see how the founders, Paul Davidson and Rohan Seth, capitalize on this wave to create and capture long-term sustainable value.

The platform does provide an opportunity for authentic conversations between a diverse set of speakers. You may find yourself in a room with a competitor, a celebrity investor, or a rising social influencer. One can use this to build a professional network, to market or launch a new product, to run marketing and advertising campaigns, or to even crowdsource ideas for all of the above. This then perhaps is where the real value creation lies. Afterall, how many social media platforms do not currently require you to constantly look at screen. Clubhouse lets you use it in the background and be a passive participant. Clubhouse could even charge for access to premium quality rooms and could someday even become the content creator like Netflix or Prime Video. By changing the way people find, engage, and derive value from the platform, the creators can drive long-term value creation and capture.

The platform will soon face competition as well. Twitter, for example, is testing out a similar concept called Spaces. If the main draw to clubhouse was celebrities, there will be a significant proportion of users that will jump ship and resort back to a familiar platform with a new feature, i.e., Twitter and Spaces. Another hypothesis is whether the app will thrive in the post-covid world. Some of the initial hype could be attributed to the covid mandated lockdowns. Currently however, the company has certainly made a dent and has people talking about it, recommending it, and asking for invitations to join the platform.

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Student comments on Clubhouse – The Audio-Only Platform

  1. Very interesting article Pranav. Beyond the own potential monetization startegy Clubhouse will take, some of which you mentioned, I wonder how they will retain users wanting to monetize themselves from their use of the platform. The obvious yet indirect ones are entrepreneurs wanting to pitch to potential investors and promotion by companies and influencers through word of mouth, but are there less obvious ways in which platform participants can extract value beyond some variant of service or product promotion?

  2. Thanks for the article Pranav. Following up on Francisco’s point of users/influencers wanting to monetize themselves on the platform. I see a major flaw inherently in the ephemeral nature of the platform. Users cannot save any of the content they have produced. Compared to a podcast or other ways of building content, Clubhouse does not seem like a place where content creators will gain much return for their time if their content is immediately lost.

  3. Thanks, Pranav. I also have concerns about the sustainability of this platform. One perspective I can’t quite reconcile is the fact that, particularly for professional / educational topics, why would a listener prefer casual, unfiltered conversation versus edited, succinct podcasts? I believe Clubhouse is a fad with limited staying power, especially given the low barriers to entry.

  4. Thanks for this article Pranav. Especially since I actually joined clubhouse today. It was interesting to go through some of the conversations but like Kyle stated above, I seriously doubt the ability of influencers to monetize their work on clubhouse as there is little evidence to prove their work without the recordings and this will make contractual disputes very hard to settle. Also, i am not sure about the stickiness of the concept. Maybe a lot of people are there due to the novelty and exclusivity. Daily returning users might be a better way to capture their performance in my opinion.

  5. Really interesting Pranav! When I first heard of Clubhouse, I thought it was the same thing as that app Houseparty…but quickly realized the difference. My two major concerns with Clubhouse are 1) privacy, which you touch on and 2) moderation. While you highlight their claims to privacy, I am still very skeptical that this data won’t end up being used later down the line. I also think given the celeb user base, that fans won’t find other ways to record conversations outside of the app. Additionally, I read in the NYT yesterday that there have already been incidences of Clubhouse conversations being centered around white supremacy and conspiracies, which we know has been a huge issue for Facebook particularly for years. I wonder how they will be able to maintain the allure of the platform without giving way to being another Parler (or worse given the lack of recording).

  6. This could totally become Quibi, but it can also evolve into something brilliant. In regard to sustainability, the novelty and crazy valuation of this platform was built off the backs of black creators. I don’t think it’s ClubHouse’s imperative to cut them into some form of equity, but the creators themselves need to find away to not cede content so easily and cry wolf later. Dwight from the office said it best – you make a business by step 1 – getting all the black people to do it, make it cool, and step 2, get all the black people to stop using it.

  7. Very thought-provoking blog, Pranav! Thanks for sharing.
    This platform strikes me as a national security risk waiting to happen. I am seeing this as anideal platform for hate speech to thrive or even terror groups to gather. If the average user can be invited to the app to start a conversation of their choosing, and then invite their friends, whose to say the next attack on Capitol Hill won’t be the next viral Clubhouse chat? Does the company have a plan to defend against this? Is all audio archived or transcribed?

  8. Great article Pranav! I find it fascinating how a new platform emerges, just based on the fact that the format is innovative. I see a lot of potential for this app to be better monetized in the future (and thanks for suggesting a few ways to do so).
    While I do not think it will ever be an important source of revenue for creators (at least if they keep all conversations unrecorded), I can see it as a new way to promote one’s work. In other words, it might enable artists/creators to ‘acquire’ new people in their community based on their interests, and monetize this community on other channels. If this is achieved, I do not see creators moving away from this platform anytime soon.

  9. Thanks for sharing, Pranav, its super interesting!
    It seems Clubhouse has a great potential, and I’m very curious to see how will face competition in the next years.
    However, as mentioned by Julia, I am concerned on the security and privacy issues.

  10. Great article Pranav. I see a lot of comments about how creators will struggle to monetize. I think of the analogy of podcasts and how people like Joe Rogan apparently made $30M of his podcasts. So the assumption on audio-only not making money is not true. The second basis for people saying that it will not make money is the unrecorded nature of the platform. I also see an analogy to how television originally works. The television shows with the most views are the ‘lives’ of first-time play and they garner most of the ad revenue. If Clubhouse were to grow to get a significant amount of listeners what is stopping it to get advertising revenue like recorded podcasts and not even more?

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