Everpix versus Snapchat – To pay or not to pay


Let’s say that: the more pictures we take, the less we care about them. Not so long ago, pictures used to be memories: shots eternalizing beautiful moments. With the photographic film, we only had a limited amount of pictures to take. Not to waste them, we had to carefully choose the moment, the background, and the subjects.

Nowadays, it is a little bit different. Many people like to share a shot of their dinner on social networks. When you go to parties you can see how many people are more concerned with their camera than with socializing. But what do we do with this huge number of pictures?

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Most of the time, nothing. We store them in the big memory of our computer, and we forget about them. Sometimes it happens that a nice picture we took some time ago comes back to our mind. But: “Oh no! I cannot find it anymore!”

Based on these changes, the founders of Everpix created a complex algorithm able to organize the pictures of a lifetime in meaningful folders. This app selects, organizes, tags, and renames them. After the installation, the software is able to upload the pictures from your desktop and your online profiles. It had a freemium business model: The basic version was free, while upgrading to store unlimited pictures had a price. The conversion rate reached an outstanding 12.4%; it could have been a success. Unfortunately, last year the company went bankrupt. Their costs have been so high that the investments and revenues were not enough to cover them.

Another company which realized the change in the pictures’ value is Snapchat. Its app allows users to send photos to friends in the fastest way, as it happens with messages in a chat. The pictures disappear after a period of time, up to 10 seconds. This permits people to perceive a higher level of privacy, and sharing ridiculous moments becomes easier. Surprisingly, the business model doesn’t entail any revenues. Business angels and venture capitalists are the only ones funding the service’s costs.

Organizing to remember, sharing to forget: two different ideas, two different business models. Everpix failed because of large (yet avoidable) expenses. Snapchat is doing well, but it doesn’t produce revenues (yet?). But are services like these sustainable in the long term? Nowadays, the Internet provides funny services that explode and in most cases die, as new value propositions emerge. Will investors continue to fund Snapchat? Would Snapchat be successful if its creators decide to charge a fee? Probably not, as the price sensitivity of web users is quite high.

This doesn’t mean that Snapchat cannot be monetized. Some ideas are already being discussed. For example, they could make other companies pay in order to share pictures of their products, as currently 16 handles, Chatsports, Taco Bell, Karmaloop and the New Orleans Saints are doing for free. In other words: they can adopt a cross-subsidies model. Another way to create revenue is to implement advertisements in the app. Connecting to another social platform (Facebook, Twitter, etc.) to extract more information on the users makes implementing targeted advertisements possible. However, this would not be in line with the company’s value of privacy.

It seems crazy but business is increasingly offering free services, searching funding elsewhere. Companies must use their creativity more than ever, if they want to survive.

Group 6

Kasper – Anna – Martina – Aishani – Sara

Sources:

http://www.snapchat.com/
http://www.everpix.com/
http://www.socialmediaexaminer.com/snapchat-for-business/
http://www.theverge.com/2013/11/5/5039216/everpix-life-and-death-inside-the-worlds-best-photo-startup
http://archive.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all

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