The clubhouse is one of the apps that were launched during the COVID-19 pandemic. It is an invitation-only social media app for iOS users that allows users to have auditory communication through rooms that can accommodate up to 5000 people. One can use these rooms for live discussions, allowing individuals to participate in the discussion through listening and speaking. It is a low-cost way to connect and explore the thoughts of other people. In this article, we’ll try to explore the Clubhouse business model in depth. The curious readers will get their answers to “How does clubhouse work?” and “How does clubhouse make money?”. Keep reading till the end to completely understand the Clubhouse business model through its business strategies and plans.
Clubhouse Business Model
The clubhouse is an app that was introduced to iOS by Paul Davison and Rohan Seth of Alpha Exploration Co. in March 2020 when the world was hit by COVID-19. Its headquarter is in San Francisco, California. It was a social media startup designed for podcasts under the name Talkshow and was later branded as Clubhouse.
People can use the app only if they have an iPhone and an invite from an existing member. The clubhouse has been working hard to refine the app to be capable of supporting a larger audience. It has plans to extend its accessibility to the public in the future and is currently working on building an Android version of itself.
However, the company is facing a lot of complications because of its guidelines that prohibit conversations from being recorded, transcribed, reproduced, or shares without permission. Because of these prohibitions, there have been instances of bullying, harassment, and racism in the app. Countries like Oman, Jordan, and China have banned the app completely from being used in the country. The app gained popularity in its early months of the COVID-19 pandemic and till December 2020, the app finally had 600,00 registered users.
It’s been almost a year now and still, the app is completely community-centric.
Customer Segmentation
- Creators: These are the customers including writers, musicians, designers, etc. They have established an online presence through Clubhouse.
- Influencers: These includes people that have used almost all social media apps to build up their brand
- Community: These includes users that are using Clubhouse as a social media app to engage with other people
Key resources
- The app carries a strong image with itself
- Innovative design and audio-only features make it stand-out
- Network of creators who bring the audience to the platform s the key source
How does Clubhouse make money?
As we already know that the app has just started a year back so it’s probably in its growth state right now. In the growth state, the highest priority of any social network is to keep increasing the user base rather than to start monetizing it.
Here are the major two revenue streams used by Clubhouse:
- An ecosystem of Apps for hosts to measure engagement, improve the experience of members, and better market their events.
- Monetization tools to help the creators earn for their creative work on the app.
In the recent company update, Clubhouse says that from now on it will allow the users to send money to their favorite creators/ speakers on the app. This new feature focuses on helping to generate participant income rather than generating income through advertisements and monetization like any other app.
The ability to allow the audience to give tips to the creators is the official first layer of the Clubhouse business model. While initially implementing this business model, Clubhouse is not going to take any commission rather, a small processing fee will go to the payment processor- Stripe.
Here’s how this new business model is going to work:
Any clubhouse user can send payment to his/her favorite creator/speaker by going to his/her profile. If the creator has the feature available on the profile, the user can simply tap on the option saying, “Send Money” and enter the desired tip amount. The complete payment will go to the creator. The user who is sending money will be charged with some processing fee that will go directly to Stripe’s payment processing partner, Stripe.
How does Clubhouse work?
Here are the main features of the newly released app, which helps one to understand “How does Clubhouse work?” and “How does Clubhouse make money?”. Dear readers, stay tuned to get your further answers.
- Virtual rooms
The virtual “rooms” is the main feature of the app. It allows the invited users to communicate with each other using audio. Rooms can be categorized based on the privacy option that the host chooses. “Open rooms” can be joined by anyone using Clubhouse, “Social rooms” can be joined only by the users followed by moderators, and “Closed rooms” can be joined only by the one who has a group invitation from the moderator.
In each room, there are majorly three sections: “stage”, “followed by the speakers”, and “others in the room”.
The one who creates the room is assigned the role of the moderator who has the power to call any user on the virtual stage, mute users, remove, or add users. A moderator is identified by a green star that appears beside his/her user name. Whenever any user enters a room, initially he/she is a listener and he/she cannot unmute himself/ herself. If any listener wants to join the stage and say something, he/she can do that by clicking on the “raise hand” icon. Moderator then allows that particular user to unmute himself/ herself.
If any of the users wish to leave the group, he/she can do that by clicking on the “leave quietly” button or peace sign emoji.
- Events
Conversations in Clubhouse can occur anytime but the app also provides the facility to schedule an event. There is a feature in the app that allows the users to plan conversations in advance by creating an event. When scheduling the event, users can themselves name the event, set the time and date for the conversation. To help the moderators, users can even add co-hosts virtually through the app. This is an amazing way to host completely virtual events.
In order to remind everyone about the scheduled event, the app displays it in the “bulletin” section. The bulletin displays all the upcoming scheduled events to users and even reminds the users through a timely notification.
- Clubs
The active users at the clubhouse who have hosted at least three rooms are eligible to create a club. Clubhouse manually approves the applications for new clubs and each user can create only one club. Clubs are a community of various clubhouse users who regularly converse to discuss a shared interest. These clubs can be private or public depending on the privacy option the creator chooses. Users can easily search for clubs on Explore page and follow them. If these groups are private then also joined users can be notified when their public group is created.
To become a member of any club, users must be added by the club’s founders. Members can nominate a person to be reviewed by the founders for his/her admission to the club.
- Private invitation
As earlier mentioned, a user requires an invitation of an existing Clubhouse member to join any room. A text message is sent to new users with a joining link which when clicked leads to the sign-up page of the app.
- Explore
In the app, there’s a magnifying glass icon that redirects a user to the explore page. By tapping on this icon, users can easily search for people and new clubs to follow and also find conversations categorized by various topics.
- Payments
We have already discussed this new feature that allows the clubhouse creators to earn money by showcasing their talents. Users can easily send money as a tip to their favorite creators. The full amount is sent to the creator while a small processing fee out of this payment goes to Stripe.
Who are Clubhouse’s investors?
As per the reports of Crunchbase, Clubhouse has a total of 8 investors namely, Tiger Global Management, DST Global, Elad Gil, Andrew Chen, Andreessen Horowitz, Kortschak Investments, L.P., Tim Kendall, Scott Belsky. Out of these eight investors, there are 2 lead investors namely, Andrew Chen and Andreessen Horowitz.
The company has gone through a total of 5 funding rounds and has successfully raised a total of $110M in funding.
Conclusion
If a business model is innovative and unique, there are higher chances of achieving success in a short period. The clubhouse business model is setting an example and is not yet settled with the success. It is constantly working hard to evolve in the coming years.
If you’re willing to create and launch your social media platform similar to Clubhouse- you should go with Clubhouse clone which has customized features to let you launch an effective and innovative audio-only social media platform business.
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