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Why Snapchat and Its Ilk Face a Revenue Conundrum

samzenpus posted about 4 months ago | from the show-me-the-money dept.

The Almighty Buck 104

Nerval's Lobster writes "Snapchat managed to attract a lot of buzz in 2013—perhaps more than any other app on the market—and it's easy to see why: in these paranoid times, with the NSA allegedly sniffing around the world's collective inbox, and lots of software on the market designed to snoop into people's lives, it's comforting to have an app that'll vaporize your messages within seconds of their opening. Snapchat's executives see the startup's future as so bright, in fact, that they reportedly turned down a $3 billion buyout from Facebook. But whether Snapchat eventually accepts a buyout offer, or tries to parlay its popularity into some sort of IPO, it faces a rather unique problem: how do you make money off a free app that near-instantly vaporizes all content? Snapchat could emulate enterprise-centric vaporizing-message firms such as Silent Circle and start charging for subscriptions, but that would probably kill the service; a multitude of free rivals would likely spring up, with the express purpose of stealing irate customers away. More likely, Snapchat will probably launch some sort of display ad system, similar to what Facebook and Twitter have now—but given how it doesn't store user information on its servers, it'll probably be hard to monetize its users as extensively as those social networks. With that in mind, Snapchat might be left with two options going forward—either expand its services in a radical new (and more profitable) direction, or sell to a Tech Big Fish for a whole lot of money."

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104 comments

They simply... (5, Insightful)

spacefight (577141) | about 4 months ago | (#45766503)

... should have taken the offered cash and start a new venture, producing more in long term value.

Re:They simply... (4, Insightful)

Anonymous Coward | about 4 months ago | (#45766553)

... should have taken the offered cash and start a new venture, producing more in long term value.

^THIS.

They obviously started this company without a plan. And part of every business plan is an exit strategy - let alone HOW TO DRIVE REVENUES.

That's why it's important tech entrepreneurs to get a business advisor if you don't have business experience.

Re: They simply... (1)

Anonymous Coward | about 4 months ago | (#45768729)

But the 3 billion was a lie in the first place. No one outside of snapchat confirmed the offer was real. Facebook did not issue a statement

Re:They simply... (2)

Exitar (809068) | about 4 months ago | (#45767213)

Or even better they should have taken the offered cash and retired to a tropical island.

Re:They simply... (0)

Anonymous Coward | about 4 months ago | (#45769877)

They should have taken the cash and donated it to the Church of Scientology. That money could get a lot of people on to the Bridge to Total Freedom.

Re:They simply... (0)

Anonymous Coward | about 4 months ago | (#45770495)

Mod up

Lots of ways to monetize the company. (1)

goombah99 (560566) | about 4 months ago | (#45767359)

Remember the pets.com puppet? I'm sure that must have brought in a lot of cash at the bankruptcy proceeding. See, there's lots of ways to monetize internet companies.

I honestly don't understand how snapChat is supposed to work. I can understand the concept of "We make it inconvenient" for someone to get a copy of your picture or text. But the idea that it's gone forever seems preposterous. If the device it is beamed to can display it, then presumably all the information necessary to decode and preserve it is present in the message or in the memory of the device and thus capturable. Not to mention one could just take a picture of the picture. So how are they actually doing it?

Re: Lots of ways to monetize the company. (2)

Shawn Lower (3472557) | about 4 months ago | (#45767581)

It's simply DRM. The analog hole still exists, and it could probably be trivially bypassed with a root app, like VNC. That's before even touching their super-secure client. The app itself isn't special. Their user base was apparently worth 3 billion dollars. Once FB invests sufficient money into developing and marketing their own version, Snapshat will be worth peanuts.

Re: Lots of ways to monetize the company. (4, Funny)

goombah99 (560566) | about 4 months ago | (#45767951)

I Once FB invests sufficient money into developing and marketing their own version, Snapshat will be worth peanuts.

I've heard the internal code name for it is CrotchBook.

Re: Lots of ways to monetize the company. (1)

sqrt(2) (786011) | about 4 months ago | (#45768081)

It's even more laughable than that. You can simply take a screenshot and it'll be saved permanently. In iOS, press the home button and the lock button at the same time. I'm sure it's easy with Android, too.

Re: Lots of ways to monetize the company. (1)

tlhIngan (30335) | about 4 months ago | (#45770553)

It's even more laughable than that. You can simply take a screenshot and it'll be saved permanently. In iOS, press the home button and the lock button at the same time. I'm sure it's easy with Android, too.

Except they detect that. If you take a screenshot in Android, a message is sent back to the sender that you took a screenshot. Basically, do this enough times and the sender may exclude you from future snapchats and send you the photo directly - after everyone else has found out.

It's a form of social DRM - you don't do it because you feel left out (and you'd be outed by everyone so your social network rank falls). Or your friend can nudge you and ask why are you doing it.

Of course, I didn't mention iOS becuase until iOS 7, Snapchat also detected it (indirectly, since Apple's walled garden blocks the detection so they use proxy measures). Of course, in iOS7, such proxy measures don't need to be done anymore so the notification fails.

Re:Lots of ways to monetize the company. (1)

moschner (3003611) | about 4 months ago | (#45770241)

What they might do is look at using some kind of image recognition software to deliver ads based on the attached image. This way they don't have to worry about the user profile, but rather deliver ads based on the content of the photos. Kinda like ad words I would guess.

Re:Lots of ways to monetize the company. (0)

Anonymous Coward | about 4 months ago | (#45770425)

Oh yeah, their users would probably not object at all and would be completely calmed by explanation: "No human looks at your photos and we're not actually sending your photos to advertisers, only keywords like 'boobs', 'limp dick', 'pierced nipples', 'tramp stamp' ..."

And they'd have to implement all the analysis on the client's phone - they're (or claim to be) unable to decrypt the messages, they're only forwarding them.

snapchat DRM? (0)

Anonymous Coward | about 4 months ago | (#45770607)

It was my understanding that it was simply the "honor system" that you don't screenshot the app when it's sent to you.

Note: I haven't used snapchat

Re:They simply... (0)

Anonymous Coward | about 4 months ago | (#45767407)

Of course they should have sold out. What I'm wondering is why Facebook would have offered $3B for this. Mark Z doesn't seem stupid.

Once it got out that Facebook had purchased SnapChat I believe users would have scrambled to escape for another venue. Certainly I would have.

Someone else would have made an uncompromised one-off of SnapChat to hasten the scramble.

It would have made for good comedy to see the $3B purchase sink to zero valuation.

Self respecting people are, increasingly, not willing to put up with being pimped out for money.

I suspect the $3B wasn't for immediate cash. There was probably a time clause in there: some small pittance now and some payout scheme based upon SnapChat user base continuing to grow.

So Mark Z would have destroyed SnapChat while costing FaceBook approximately nothing!

Re:They simply... (4, Interesting)

TheRaven64 (641858) | about 4 months ago | (#45767765)

Snapchat doesn't delete content (as their recent disclosures about law enforcement access showed). They just stop it being accessible to the recipient. But people assume this is the same as deleting it, so they keep using it to send embarrassing or sensitive pictures. This means that Snapchat is a platform for building the world's largest database of blackmail material, and even better the victims, uh, users, contribute the material themselves. Anyone who can't see a revenue stream there is extremely shortsighted.

Re:They simply... (2)

sqrt(2) (786011) | about 4 months ago | (#45768107)

Please explain how a legitimate business, which has to answer to the court of public opinion, not to mention the real courts, would be able to monetize blackmail (an illegal activity).

Elementary, my dear Watson. (1)

Anonymous Coward | about 4 months ago | (#45769031)

Please explain how a legitimate business, which has to answer to the court of public opinion, not to mention the real courts, would be able to monetize blackmail (an illegal activity).

By partnering with people who have no respect for the law....like the CIA, or NSA.

--shiftless (410350)

Re:They simply... (1)

rsborg (111459) | about 4 months ago | (#45769655)

... should have taken the offered cash and start a new venture, producing more in long term value.

Most buyout offers have these annoying things called conditions - one of them could have been that a) founders must stay to certain period/goal or achieve a result post-acquisition (usually monetary, might be tied to purchasing company's metrics) or the payout offered (often in purchasing company's stock) would be reduced (sometimes it's worded positively like $X without conditions, but $5*X if conditions are met, with partial work being rewarded appropriately) or b) preventing founders from starting a competing venture using same idea/basis as purchased company.

Companies purchasing others aren't idiots - FB wouldn't buy Snapchat just to have the founders ditch - their effort/involvement is likely a large part of the purchasing price.

Fixed (0)

Anonymous Coward | about 4 months ago | (#45766511)

Fixed it for you
but, given how it does store user information on its servers, it'll probably be easy to monetize its users as extensively as those social networks.

A Better Question (4, Insightful)

CanHasDIY (1672858) | about 4 months ago | (#45766517)

Why the obsession with money? Seriously.

Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?

Re:A Better Question (2)

Trepidity (597) | about 4 months ago | (#45766593)

In Soviet America, individuals are devalued and the only thing that counts is your numerical contribution to The American Economy.

Re:A Better Question (1)

wonkey_monkey (2592601) | about 4 months ago | (#45766599)

Because in some cases there is no other reason that makes it worth doing.

Re:A Better Question (0)

Anonymous Coward | about 4 months ago | (#45766757)

Because in some cases there is no other reason that makes it worth doing.

Sure, but those cases are things like ERP systems and Disaster Preparedness Plans. Snapchat is something programmers might do just for fun.

And FWIW, I do have a very low score in the Art of More.

Re:A Better Question (1)

Anonymous Coward | about 4 months ago | (#45766967)

Sure, but if they had taken the money, then they would have had the freedom to spend their entire lives only doing things that they wanted for fun.

Instead, they might someday have to work on ERP systems and Disaster Preparedness Plans.

Re:A Better Question (1)

Nemyst (1383049) | about 4 months ago | (#45766681)

In this day and age, the corporation is the pinnacle of human advancement. And corporations make money as a fundamental principle.

Yes. (5, Insightful)

Anonymous Coward | about 4 months ago | (#45766731)

Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?

If you are not making money, you can't pay for the infrastructure, help, taxes (like property taxes that you have to pay regardless of your profitability), and other expenses of running the firm - let alone paying yourself so you can pay for rent, food, healthcare, student loans, etc ....

As far as them not taking the 3 billion, that's because they haven't planned and their hubris in thinking that, some how, they can make more on their own.

Re:Yes. (1)

lsllll (830002) | about 4 months ago | (#45767183)

Which is why I don't understand them not taking the 3 billion. It's just an app. It's not like it's a comprehensive social web site. I can't imaging FB having offered 3B for a simple app. You can't build a social experience around one app, so sell the app and use the money to come up with something entirely different, without the need for VC.

Re:Yes. (0)

Anonymous Coward | about 4 months ago | (#45767577)

The app startup world is screwed up when it comes to valuation, and it's mostly FB that has screwed it up as has Amazon. Valuation of a company is more art than science and it's all implied valuation.

Prior to FB's IPO, Goldman Sachs invested $500M for 1% ownership. This implied a $50B valuation of the company that earned less than $1B in revenue. Any other company out there would be around $15-$20B with $1B in revenue, not $50.

Zuckerburg bought Instagram for $1B when it had absolutely no revenue whatsoever. It has not recouped the investment at all; FB's revenue has not increased due to Instagram.

Amazon's another one screwing things up. Again, most companies have a 15-20 P/E. Granted those are different for different industries, but Amazon maintains a 1,426 P/E. Their profits are negative and the prior year was .01%. Compare that to WalMart, their nearest competitor, who has a 15 P/E and 3.6% profit. Wall Street and the big investors seem to have a serious problem valuing online companies; they think at some point they're going to explode even more than where they're at, and they drive up the price. That in turn creates this ongoing perception of online companies being worth a lot more than they should be. At some point there will be a correction, when people realize a company is only worth the money it makes.

Snapchat makes no money. They have no way to monetize whatever it is they do. It's neat and nifty and it's a complete loss operation; a money sink.

Re:Yes. (2)

TheRaven64 (641858) | about 4 months ago | (#45767911)

Prior to FB's IPO, Goldman Sachs invested $500M for 1% ownership. This implied a $50B valuation of the company that earned less than $1B in revenue. Any other company out there would be around $15-$20B with $1B in revenue, not $50.

All that really means is that GS expected that they could offload 1% of FB stock for more than $500M. Their mechanism for doing this was to create a fund backed by the FB shares that they could then trade. Their favoured customers were allowed to buy it early. They then hyped it and let those customers sell it on again. Then, at the Facebook IPO, they liquidated the fund and turned it into public shared. The people who bought it at the highest level of hype made a loss, GS made a profit, and GS's favoured customers made a profit.

It didn't matter to GS what the fund was actually backed by, just that they could hype it and dump it.

Re:Yes. (1)

Anonymous Coward | about 4 months ago | (#45768877)

Zuckerburg bought Instagram for $1B when it had absolutely no revenue whatsoever. It has not recouped the investment at all; FB's revenue has not increased due to Instagram.

Sure it has.

FB without Instagram: Yet another IPO that priced at, say, $20, popped to $40 on the open, and left 50% of the money on the table.

FB with Instagram: The retail investor hype from the $1B Instagram buyout enabled them (and GS, who owned a chunk of FB pre-IPO) to price the IPO at $38. Retail investors got fucked, but if it enabled them to bring in another $1B in cash during the IPO, it definitely paid for itself. (Even if all it did was inflate their market cap by $1B on the day of the IPO, it's arguable that it worked.)

Re:A Better Question (0)

Anonymous Coward | about 4 months ago | (#45766749)

Are you Grigori Perelman or something?


I think you are thinking of the money as a stick, when really it's a carrot.

Re:A Better Question (5, Insightful)

roman_mir (125474) | about 4 months ago | (#45766775)

You better explain to me who is paying their bills? They have employees, right? They are renting space somewhere, correct? They have servers running, so they bought those, isn't it so? How about energy and support and maintenance of those servers?

So you better try and find an explanation how can a business live without making money and if the bills so far were paid by investors, then why are you surprised that investors want to see a return?

Re:A Better Question (0)

Anonymous Coward | about 4 months ago | (#45767113)

You could have a point if they were doing it for fun, or maybe as a service to community in this age of privacy erosion (and I don't recall articles about, say, "FreeBSD has poor monetization plans in long term!")

But they're going around fleecing venture capitalists - they're a business, not a charity or a hobby. They have bills, loans and employees. If they're not making anything off it - how long can they afford paying those? What will they say when investors come asking about the millions they gave to Snapchat?

An answer (of sorts) (2)

sjbe (173966) | about 4 months ago | (#45767231)

Why the obsession with money? Seriously.

Because money is important for reasons that should be self evident and having more of it can make your life a lot easier.

Why is it, that unless somebody's making fat bank off a thing, the thing is considered to not be worth doing?

Because the amount of money you can charge for something is a pretty useful proxy for how much it is valued by society once you take scarcity (real or artificial) into account. Furthermore if people are willing to pay a lot for something that means there are potential opportunities to earn a living providing that something. Since we all have to earn a living it is probably in our interest to pay attention to what is likely to be profitable and what is not.

Re:A Better Question (1)

Jason Levine (196982) | about 4 months ago | (#45767369)

Because any service offered costs money. Even if it's done as a hobby by one person (and thus no salaries need be paid), server space and bandwidth cost money. Without some sort of income, the service depends on the bank account of the person running it. Small projects can get away with being run off of donations. Larger projects require more funding. Snapchat, like make other Internet services, is spending money to keep the service alive but isn't taking any money in. Eventually, this means that they will either shut down due to lack of money or will need to find a way to bring money in to pay for the servers/bandwidth/people power. They might get venture capitalists to give them money, but this just makes the situation worse as the venture capitalists will expect some return on their investment. (Not as much as stockholders might, but it ups the pressure to find some way to make a profit.)

Finding a way to make money with a service isn't being greedy. If anything, I'd say turning down a $3 billion bailout because you want more money is greedier than trying to find out how to let your service pay its own bills.

Re:A Better Question (2)

DaveV1.0 (203135) | about 4 months ago | (#45767553)

Please tell me how you manage to have internet access and servers without paying for them.

Re:A Better Question (2)

CanHasDIY (1672858) | about 4 months ago | (#45767759)

Please tell me how you manage to have internet access and servers without paying for them.

I have a day job that covers the majority of my expenses.

Not everything I do is for profit.

Re:A Better Question (1)

DaveV1.0 (203135) | about 4 months ago | (#45768945)

Does your day job provides you with enough money to pay for the servers and bandwidth needed by a service like SnapChat? That is the infrastructure to handle about 4,500+ "snaps" a second. Oh, and don't forget the 30 employees SnapChat employs. Assuming they earn $50,000.00 per year, that is $1.5 million in salary per year.

I am sure that your day job is paying you the $2 million or so need to keep SnapChat or a similarly sized service running.

I am sure that "[n]ot everything [you] do is for profit" but your job is one of those things you do for profit. For Spiegel, SnapChat is his job, so he is doing it for profit. SnapChat's employees are working as their day job. They want the company to turn a profit so the keep getting paid, just as you want whatever company you work for to turn a profit so you continue to get paid because you still have a day job.

Re:A Better Question (1)

CanHasDIY (1672858) | about 4 months ago | (#45775619)

You obviously missed my point, which is probably my fault for not stating it more clearly.

I get that shit's gotta be paid for; my complaint is how, in our society, unless something is not just actively making money, but actively making more money today than it did yesterday, then it's considered a stupid waste of time. I dunno, somehow that irritates me... probably because there's lots of shit that wouldn't be very profitable but is still worth doing.

Like curing disease, for example - it's a noble idea, and one we can achieve technologically speaking, but we don't, because a cure you only get to sell once, whereas with "treatments" you get repeat customers.

Re:A Better Question (1)

bazorg (911295) | about 4 months ago | (#45773803)

Apart from the exit strategy lottery thing, there is the issue of ongoing costs.
Since the app is free, the users don't pay per use or as subscription and there's no sponsor... who's paying for Snapchat to exist? At some point the investors will want their money back. As it is today, I don't even see how they cover running costs.

Pretty simple, really (4, Insightful)

argStyopa (232550) | about 4 months ago | (#45766519)

"how do you make money off a free app that near-instantly vaporizes all content?"

The annual payment you're getting from the NSA to make sure they're permanently on the cc list?

Re:Pretty simple, really (0)

Anonymous Coward | about 4 months ago | (#45766655)

"how do you make money off a free app that near-instantly vaporizes all content?"

Personally, I would collect all the nudie pictures and go with blackmail...

Re:Pretty simple, really (0)

Anonymous Coward | about 4 months ago | (#45766829)

So, Mrs. Teal, send us 15 pounds, by
return of post please, and your husband Trevor, and your lovely children
Diane, Janice, and Juliet, need never know the name... of your LOVER IN
BOLTON!

Re:Pretty simple, really (5, Funny)

fustakrakich (1673220) | about 4 months ago | (#45766693)

I would hope they are careful enough to use the bcc list...

Re:Pretty simple, really (0)

Anonymous Coward | about 4 months ago | (#45767505)

That feature is available in the "Premium" edition.

Who cares? (3, Insightful)

DogDude (805747) | about 4 months ago | (#45766525)

Really, who cares if they can make money or not? That wasn't the whole point of Snapchat. Hell, it's not the point of 99% of tech companies these days. The point is to be bought by somebody else, not to make profit. Making profit is hard. Convincing some deep-pocketed sucker to buy you out is much easier.

Re:Who cares? (5, Insightful)

Arrepiadd (688829) | about 4 months ago | (#45766581)

The point is to be bought by somebody else, not to make profit.

Then... why reject 3 billion from Facebook? How many other companies, with more money to waste, are willing to buy these guys, from where you are looking at it?

Re:Who cares? (0)

Anonymous Coward | about 4 months ago | (#45766619)

Looking for logic in the business sense of the average Slashtard is an absurd exercise. Just avoid their foolish ideas. What has been seen can't be unseen.

Re:Who cares? (1)

ericloewe (2129490) | about 4 months ago | (#45766651)

They probably think there's an even bigger sucker around the corner.

Unfortunately, they might be right.

Re:Who cares? (4, Interesting)

QilessQi (2044624) | about 4 months ago | (#45766841)

There was. Google supposedly offered them 4 billion:

http://bgr.com/2013/11/15/snapchat-google-buyout-rumor/ [bgr.com]

Snapchat is gambling that they will keep growing to the point where they can get an even bigger offer.

Meanwhile, how did that Instagram purchase pan out? Anybody know if it's been worth the $1B that Facebook spent on it?

Re: Who cares? (1)

statusbar (314703) | about 4 months ago | (#45767391)

But were they offered that amount in cash? Or restricted shares of some sort which would not be able to be liquidated for a long time in which the value of those shares can plummet?

Re: Who cares? (1)

QilessQi (2044624) | about 4 months ago | (#45767519)

Good question. Most of the news regarding these deals is short on specifics. But the dollar amounts sound absolutely crazy unless the company making the purchase plans to do either/all of the following...

(1) Leverage the popularity of the app to get the user to sign up for one of the buyer's flagship apps (like getting more G+ users), which by increasing the flagship app's user base will then entice more advertisers to pay for ads in the flagship app.
(2) Use the user metadata from the app to display targeted ads, either in the app itself or [again] in the buyer's flagship apps.
(3) Push related, monetized services into the app itself. E.g.: "For only $9.99/month, we'll send you glossy photo prints plus a CD containing all Instagram photos you snapped that month, for the next year. Don't lose a precious moment!".

Re: Who cares? (1)

Kalriath (849904) | about 4 months ago | (#45773367)

I dunno about you, but most people would be pretty terrified of a package from Snapchat containing all their snaps for the month.

Hell, maybe it would be "for only $9.99 per month, we won't send you glossy photo prints of all the snapchats you sent this month. Lose every moment!"

Re:Who cares? (0)

Anonymous Coward | about 4 months ago | (#45767561)

Meanwhile, how did that Instagram purchase pan out? Anybody know if it's been worth the $1B that Facebook spent on it?

There is nothing unique with Instagram. Facebook or Google's engineers could put together a similar system in a couple days.

Facebook bought them for the users, and to put a potential competitor out of business before they got too big.

Why do people use Facebook? Two main reasons: to chat with other people , and to share pictures with other people.

If hundreds of millions of people use instagram to share pictures, then they are spending much less time on facebook, and are more likely to stop using facebook.

That is why facebook bought instagram, and it was a bargain.

Re:Who cares? (2)

DogDude (805747) | about 4 months ago | (#45767085)

There are plenty of companies with more money to waste.

The rejection of $3B was greed, pure and simple. They're not expecting, planning, or probably even striving to make a profit. They're just gambling that somebody will buy them before the fad subsides.

Obvious (2)

AmiMoJo (196126) | about 4 months ago | (#45766545)

TFA answers its own question. You go IPO or sell the company to some other sucker for billions, then you are set up for life and can do what the hell you like. Making money is someone else's probably, your only goal is to look valuable because you have x billion cattle, sorry users, that someone might one day figure out how to milk.

Re:Obvious (1)

DaveV1.0 (203135) | about 4 months ago | (#45767641)

So, you are suggesting they should act like Enron, Madoff, and all the other financial ripoff artists. Interesting morals you have there.

Beware teh ILK for it is YOU! (0)

Anonymous Coward | about 4 months ago | (#45766571)

Nut said.

You are what you eat!

Nut said.

You are no better than the company you keep!

Nut said.

You are much less of a person than you believe!

Nut said.

Are you sure they don't store information? (1)

cybaz (538103) | about 4 months ago | (#45766573)

They may not store the image itself, but I don't see anything stopping them from storing information describing the image.

Ads (0)

Anonymous Coward | about 4 months ago | (#45766591)

Ummmm, how about show an ad first, then allow them to see the snapchat afterwards. No choice but to watch ad if you want to see that nude.

SnapInvest (3, Funny)

retroworks (652802) | about 4 months ago | (#45766603)

It's a precurser to a future stock market, where buyers invest their money, the corporation's stock skyrockets, then crashes, and the money disappears without a trace.

More vaporized than a phone call? (4, Insightful)

BlueMonk (101716) | about 4 months ago | (#45766639)

How is the content exchanged on Snapchat any more ephemeral ("vaporized") than a phone call? Or isn't it? Just because it's "vaporized" from your perspective doesn't mean it wasn't captured *somewhere*.

Re:More vaporized than a phone call? (1)

AvitarX (172628) | about 4 months ago | (#45767617)

It's more ephemeral than an SMS etc.

It doesn't replace phone calls, it replaces texting, and status updates.

Re:More vaporized than a phone call? (1)

BlueMonk (101716) | about 4 months ago | (#45767653)

And the assumption is that the NSA can record text messages, but not phone calls?

Re:More vaporized than a phone call? (2)

AvitarX (172628) | about 4 months ago | (#45768749)

No, I don't think snapchat is about protecting from the NSA (the article is stupid), nor is it really about protecting from malicious actors (as they say, it's not perfect).

It's about having conversations with friends that disappear when everyone is behaving. It's about not having a record of everything said for the last however long there forever. In a fit of anger, the messages are gone. In that regard it is like a phone call, but not a text. It's about having a conversation, then it's gone.

I personally like it, and hope that they find a non-obnoxious way to monetize (I'd go for it being a few bucks a year or something, especially if it was just a dial an SMS number and it gets tacked to your bill, but I assume that would kill it for most).

I assume that most snapchats and voice calls are not recorded if someone is not a POI, but that's primarily because I think that the NSA is smart enough to not want too big a haystack to find the needles, which may be a terrible assumption.

Phonecalls are generally ephemeral, as are snaps chats, SMS and Facebook statuses are generally not.

Re:More vaporized than a phone call? (1)

BlueMonk (101716) | about 4 months ago | (#45769121)

Right, my comment was just concerning the summary's claim that Snapchat's popularity was due to NSA privacy concerns.

Although there are conflicting claims about whether the NSA listens to phone calls, as outlined on the Wikipedia page covering the NSA's Utah Data Center [wikipedia.org]), I suspect the truth is that they maybe collect recordings of most of the activity taking place on the internet and phone networks (the haystack), but never have to search for a needle because they don't look through it unless they have a specific target (a specific phone number or email/IP address). If they don't actually listen to that content without a warrant, then their statement that they don't "listen in on phone calls" could be true even though they are collecting them all. They have the storage space for it there, so it's not out of the question, and what else could they use it for? And according to a Wired Magazine article [wired.com] from March, they are wired into the phone network. (Note the article is 5 pages long; the talk about wiring into telecom is on the top of page 3 [wired.com]).

The article is older than all the recent concern over privacy from the NSA, and I suppose it's possible that all this has turned around since then as a result of the outcry. But who knows?

Re:More vaporized than a phone call? (1)

AvitarX (172628) | about 4 months ago | (#45769621)

Yeah, the article (well the summary anyway) is pretty stupid.

The main snapchat users aren't at all concerned about NSA. It's about lack of evidence for family, protection from revenge porn, and primarily (for me anyway), the feel of a conversation. It's simply more fun to squeeze in a short message with a goofy face, rather than a text. The short life of the snap makes it feel more, something intangible, and perhaps based on my own forms of crazy, but I think the creators were onto something when it feels better/specialer to send something that then is gone.

As I'm not a child, I'm not really up to no good on it, so I don't really benifit from the evidence destruction aspect, but people do some crazy things when they feel wronged, and not having a huge backlog of blackmail to do something with that everyone will likely regret in the end when cooler heads prevail is a perk for all conversations I think. I generally use google chat with history off, except for work where I may want to reference it.

I suppose, if snapchat isn't completely compromised, and uses HTTPS, then it is less interceptable than a phone call, as you point out, the phone network is totally compromised. I suppose it's less obvious than using PGP on email, if we assume encryption makes us targets, but even so, I wouldn't think it's the way to communicate if you want to avoid surveillance (presumably they'll mirror your snaps with a warrant).

Doesn't store information? (1)

wonkey_monkey (2592601) | about 4 months ago | (#45766643)

More likely, Snapchat will probably launch some sort of display ad system, similar to what Facebook and Twitter have now—but given how it doesn't store user information on its servers

They may make a point of not storing the images on their servers, but what's to stop them storing information on users? For that matter, what's to stop them displaying non-targetted ads?

it faces a rather unique problem: how do you make money off a free app that near-instantly vaporizes all content?

It sounds to me more like it faces a rather imaginary problem made up by the writer of the article.

Re:Doesn't store information? (1)

Anonymous Coward | about 4 months ago | (#45766743)

Because people that use Snapchat are people who care about privacy. If it leaked that user info was stored, everyone would freak out and leave.

Re:Doesn't store information? (3, Insightful)

HaZardman27 (1521119) | about 4 months ago | (#45767049)

Because people that use Snapchat are people who care about privacy

Please. The majority of users are using it because it's a fad.

Re:Doesn't store information? (1)

bazorg (911295) | about 4 months ago | (#45773815)

exactly. Another reasons is because parents and teachers have made twitter and facebook too mainstream for teenage taste.

They turned down THREE BILLION?!? (0)

Anonymous Coward | about 4 months ago | (#45766729)

They will regret that, if they don't already. Tech moves so fast, people get tired of one thing and move to the next. They should have sold when they had the chance.

Crazy claims in summary (4, Informative)

mpicker0 (411333) | about 4 months ago | (#45766745)

...it's easy to see why: in these paranoid times, with the NSA allegedly sniffing around the world's collective inbox, and lots of software on the market designed to snoop into people's lives, it's comforting to have an app that'll vaporize your messages within seconds of their opening

So, Snapchat's wild success is from people paranoid of the NSA who use it to send messages, even though multiple [slashdot.org] stories [slashdot.org] have appeared about how Snapchat messages can be saved without the sender's knowledge, and Snapchat's own website [snapchat.com] lists conditions under which messages will be preserved. Riiiiight.

...it doesn't store user information on its servers

Even assuming it doesn't store images (which it does, see above), to use the application, you connect with people as in any other social networking application. This is definitely "user information," and this metadata (some might even call it data) has value.

Attn: Moderators (-1, Troll)

larry bagina (561269) | about 4 months ago | (#45766827)

A Dr. diagnosed me with tourrette's syndrome so I could get some medical marijuana. All you jizz-sucking moderators should stop modding me down since that's discrimination. penis!!!

How can I not make money? (3, Funny)

Sponge Bath (413667) | about 4 months ago | (#45766997)

I tweeted about a snapchat of myself playing farmville. Fame and fortune are sure to follow.

Re:How can I not make money? (0)

Anonymous Coward | about 4 months ago | (#45768073)

I twittered my google all over her facebook and she sent her friend a snapchat of it.

Better question (2)

Errol backfiring (1280012) | about 4 months ago | (#45767225)

The question is not "How can a site make money?", but "how do I prevent a nice site to be bought by an evil company?"

Re:Better question (1)

DaveV1.0 (203135) | about 4 months ago | (#45767625)

By "evil company", do you mean a company that charges for it's service or sells eyeballs? If so, how is that "nice company" supposed to pay it's bills?

Re:Better question (0)

Anonymous Coward | about 4 months ago | (#45767739)

You forgot to add some apostrophe's: sell's and eyeball's.

Re:Better question (0)

Anonymous Coward | about 4 months ago | (#45768093)

Hi's mistake.

They missed their boat already (1)

Tony Isaac (1301187) | about 4 months ago | (#45767271)

They should have taken the $3 billion and run with it.

SnapChat only works as long as it doesn't need to make money. Once advertising comes in, advertisers will be calling the shots, because they are paying the money. They will want to know more and more about users and what they are sending to each other. They'll eventually get what they want.

snapchat? (0)

Anonymous Coward | about 4 months ago | (#45767397)

so it is a new program for smartphones? I thought it was software for webcams. learned something new today.

Advertising (1)

mveloso (325617) | about 4 months ago | (#45767567)

They can just stick a small ad before or after a picture is shown. If the content is amusing enough, people will click through.

They have to watch out that they don't make it a pain in the ass to bypass the ad. They already know this - not very many people like ads in general.

The problem with free (1)

DaveV1.0 (203135) | about 4 months ago | (#45767621)

Snapchat could emulate enterprise-centric vaporizing-message firms such as Silent Circle and start charging for subscriptions, but that would probably kill the service; a multitude of free rivals would likely spring up, with the express purpose of stealing irate customers away.

So, the end-user ends up with two choices

  1. pay for SnapChat, where all there contacts currently on.
  2. move to one or more of the new free services and hope you choose well and they don't go bust

Those new free services will still have a revenue problem. And, if one is better capitalized, then it may buy up it's rivals and have an even bigger revenue problem.

Everyone needs to eat. Servers need power. It costs money to run servers, pay for bandwidth, pay for facilities, and have employees. If a company has no revenue then it is going to fail eventually.

basically stupid-or-evil idea (0)

Anonymous Coward | about 4 months ago | (#45767771)

The only way to make money off of something that ought to just be a relatively trivial implementation of a relatively trivial protocol, is to either trick your customers, or make the implementation worse.

Think from a user's point of view: if you're paying for secure communications, then your communications are probably less secure than that other guy's, who isn't paying. You never ever pay for this kind of stuff. So that makes me wonder how you ever get into the business of trying to sell it. You've got to have a "..and then we fuck everyone" step in your business plan. And if that's your plan, I'm not here to help you.

Tech companies forget their place (0)

Anonymous Coward | about 4 months ago | (#45767861)

Every service they provide is a nice-to-have but not an essential necessity that people will pay for. Google and other large tech companies are playing the "tech patron" role, keeping the service running even if there is no monetary rationale for it just because it works as another value-add to the Internet as a whole.

I Dislike Arial Fonts (0)

Anonymous Coward | about 4 months ago | (#45768263)

I'll Ilk Anyone Who Says Differently.

Greed (0)

Anonymous Coward | about 4 months ago | (#45769787)

Folks, they turned down a 3 Billion offer. For something that is trivial to engineer, though the idea itself is somewhat novel. If that is not revenue, I don't know what is. There is no Conundrum here, only Greed.

Wrong way around (1)

martin-boundary (547041) | about 4 months ago | (#45770771)

More likely, Snapchat will probably launch some sort of display ad system, similar to what Facebook and Twitter have nowâ"but given how it doesn't store user information on its servers, it'll probably be hard to monetize its users as extensively as those social networks.

What they should be deploying is some kind of system that instantly vaporizes other companies display ad systems before they reach my retina. I'd pay money for that.

setyajatifurnindo (0)

Anonymous Coward | about 4 months ago | (#45771119)

come to my website furniture online store www.setyajatifurnindo.com

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