Starting this week, Snap will start offering an optional subscription called Snapchat Plus that unlocks exclusive and early access features.
The subscription costs $3.99 per month and is aimed at “the people who spend most of their time communicating with their best friends on Snap,” said Jacob Andreou, the company’s senior vice president of product. The edge† Dubbed Snapchat Plus, it’s Snap’s first real attempt at making money outside of advertising, though Andreou says there are no expectations of Plus becoming a “material new revenue stream”.
Initially, Snapchat Plus is mostly a cosmetic upgrade. Its most notable features include the ability to change the app icon style, see who has rewatched a story, and pin one of your friends to the top of your chat history as a “BFF.” (Yeah, that last one gives me Myspace vibes too.) Going forward, Andreou says that “single-player” features like the BFF pin will likely be limited to Plus subscribers, while features that rely on interacting with others will eventually will be released to the entire user base.
By introducing a paid tier, it’s natural to wonder if Snap plans to charge people to turn off ads in the app. Downplaying the possibility, Andreou says that “ads will be at the heart of our business model in the long run.” Still, it’s clear that Snap sees an opportunity to diversify its revenues. The hardware business makes no sense in the near future and probably won’t be, so subscriptions are an obvious area to explore.
Snap isn’t the only social app to recently introduce a paid tier: both Twitter and Telegram have rolled out their own subscriptions for professional users, and Discord has been monetizing its optional Nitro subscription for years. During our chat, Andreou mentions casual conversations he’s had with people who work at paid streaming services – many of which have added or are in the process of adding ad-supported tiers. “The levels where they generate less revenue but can inject ads are ultimately by far the most lucrative and beneficial levels,” he says.
Andreou downplays the timing of the announcement, which comes just a month after Snap warned of slowing revenue growth. He says his team has been considering a paid offer since 2016, although I still sense a sense of urgency. The company called Snapchat Plus an “early” internal test after discovering it in the app’s code just two weeks ago. Now it is rapidly being released in Snap’s key markets: the United States, Canada, the United Kingdom, France, Germany, Australia, New Zealand, Saudi Arabia, and the United Arab Emirates.
In my conversations with Snap employees over the years, I’ve constantly heard about the difficulty of monetizing the main chat section of the app without posting ads. With Snap’s stock price trading below its 2017 IPO price, there are more reasons than ever to find out. So while Plus isn’t expected to move the needle meaningfully at first, I take it as a sign that Snap knows it needs to find more ways to make a quick buck.