Clubhouse monetization has all the content creators, including those in beauty, excited in anticipation. The app introduced the tipping option for 65K users a couple of days back, but that’s just the start of the various monetization options to be rolled out by the app, as stated by the co-founder, Paul Davison, during Clubhouse Townhall.
The tipping option is the right step in understanding the kind of content and format that gets the most tips, paving the way for future monetization models.
Clubhouse has a magic zone(read about it on my other article), a room with a high speaker: listener ratio and engagement on stage, a conversation format that the app wants to drive.
Below are two possible business models, with the magic zone at the center, and their impact on content creators’ profitability and strategic options.
Possible Monetization Models
The app founders claim they would never sell user data to brands; I am leaving out those options.
These monetization models and subsequent strategic options are for the innovator moderator, content creator, who wants to monetize on Clubhouse and wants to play for the end game, beyond early adopters, targeting the app’s mainstream user.
Let’s check them out one by one.
Please note: I have intentionally kept the tipping option out for now as I don’t view it as an end-game monetization model for content creators, but I will cover it in one of my following articles for sure.
Monetization Model 1: Subscription to Club
Volume Strategy
Profit Formula
Nr( Price-Cost)*N
Price
The price of a subscription will be low because of monthly billing and the need to retain users month on month.
Cost
The cost of creating and organizing content and inviting an audience won’t be high. Also, the cost of paying other moderators would be low for a win-win relationship.
Number of Users in a Room
No. of the audience will be limited for higher FOMO and engagement, aiming for the magic zone.
Nr: Number of Rooms
Nr=No. of different types of rooms in different niches. More rooms/per club member to offer variety and attract new club members.
A high no. of rooms(Nr) would compensate for the smaller audience in a magic zone room and offer niche content for higher intimacy for a member and subsequent satisfaction.
Also, to offer high value in exchange for subscription, the club would need both variety and volume of content.
To maximize the profitability for an Innovator Moderator ( Content Creator): Creator First ( Club owner, who wants to monetize on Clubhouse), the club would need maximum Nr=no. of rooms, which means the club would need to maximize the membership.
The low subscription price and the resultant volume strategy would necessitate multiple partnerships with other moderators to share members (or cross-promote to non-subscribers of a club) and content creation resources.
A paid subscribers’ need for high value would require a high volume of content, warranting the creation of seasons with regular episodes.
Volume Strategy Imperatives
Partnerships with other mods would be essential to increase paid membership of the club, create the volume of content and host rooms, overcoming the time constraint.
The club owner isn’t likely to be present in all the rooms hosted under the same club.
To attract new members, a club would need to continuously host/launch rooms with new topics, and to retain, the club would have to make a single user attend multiple rooms regularly.
The volume of content: length of a season and episode will matter as the subscription is usually sold on value, driving your member acquisition and retention.
Brand Sponsorship
Brands would partner with content creators ( creator first) beyond just sponsorship money and help them with the audience, creative and content resources available to the brand.
Call To Action
Under the subscription model, the calls to action would bring the members into the funnel by offering additional value, aligned with the room’s topic.
Clubhouse would prefer directing the member to a landing page on a brand/content creator/club’s page on Clubhouse just like Instagram.
Impact on Content with Example of Beauty-Seasons and Episodes on Niches, Brand Role and Calls to Action for Members
1.Courses
-Makeup/Skincare Tutorials
-Business Courses
-Certifications
Call To Action
The audience would be given a certification of attendance and excelling in partnership with a brand and free samples for practicals. The courses would have to be structured in a way that every episode has a call to action ranging from signing up for certifications to quizzes recorded on the final certificate.
2.Q&A
-Business Issues
-Beauty Hacks
-Personal Beauty Issue
Call To Action
Personalized consultations with brand or brand experts: In the case of smaller Indie beauty brands, these consultations would be an opportunity for the founder to form personal relationships with the potential consumers, educating them both on brand and the beauty issue, as well as offer customized deals.
The established beauty brands could direct these consumers to their partner beauty advisors at retailers/online and offer customized deals.
Bigger beauty brands could offer to resolve beauty issues for free and use the information for research purposes.
3.Founders Chat
-Niches Specific
-Business Challenge
-Trend
Call to Action
Direct Message Founder for special coupons/gifts: This would mainly work for aspiring business owners who value speaking 1:1 with a successful founder for advice and special deals. Founders could use the interaction for their social media content.
4.Tips and Tricks
-Business Function
-Beauty Issues
-Self-Care, Look and Style
Call to Action
Sign up for seasonal look & styles|custom guidebooks: The audience would have the opportunity to feature in one of the looks and styles created by the brand. Attendees of the room will also receive free, limited edition guidebooks.
The brand would get resources to test and get feedback on the planned rollouts and get their target audience into their funnel.
5.Beauty Fails
-Product Issues
-Business and Personal Stories
-Culture
Call to Action
Feature your story or resolve personal beauty issues: Paid members would get to share their personal beauty fails on the stage and win a chance to feature in one of the social media stories of the brand.
Brand would have the audience members enter its funnel and also get feedback on product issues.
Monetization Model 2: Tickets for Premium Rooms
Premium Pricing-Innovation Strategy
Profit Formula
(Price-Cost)*N
Price
There is an opportunity to charge a much higher price because of very high experiential value and FOMO.
These rooms/events will draw app users from both the beauty community and seekers of a particular experience.
Cost
The cost/episode will likely be higher than producing subscription content because of the resources needed to create exclusive, scarce, and time-bound content.
N
No. of audience in a room will be limited for higher FOMO and engagement ( magic zone).
While you can organize different rooms/events in different niches, this strategy does not focus on the volume of events/rooms but on delivering an elevated experience to charge a high premium for a ticket.
To add a bit of scale and further increase profitability, a content creator could organize the same room, with a little customization, in a sequence for different members, thus keeping the room size small for the magic zone. This would allow offering the experience to a larger audience, making more profits in turn.
Innovation Strategy Imperatives
The content would go beyond beauty to innovate with the following templates in increasing order of experiential value.
Content Innovation-Beauty+x, Beauty^x, x^Beauty
x=Exclusive, Scarce(Limited) & One-Time + Creative Content fit with Live Audio Conversation/Event
Examples of Creative Event Fit with Live Audio Convo=Gamification, Party, Audio Shows, Awards, A+Celebrities, Launch, Gossip, Humour, Theatre, etc.
Partnerships with creators outside of Clubhouse would be critical to delivering content that is a rarity in itself.
The uniqueness of “x” (Content & FOMO) will be a big factor driving the mismatch between demand and supply of tickets to determine the price.
Brand Sponsorship
Brands would partner with content creators ( creator first) beyond just sponsorship money and help them with the audience, creative and content resources available to the brand.
Call To Action
Under the ticketing model, the call to action would enhance the experience, aligned with the event/conversation, and bring the consumer into the funnel as a result.
Clubhouse would prefer directing the member to a landing page on a brand/content creator/club’s page on Clubhouse just like Instagram.
Impact on Content with Example of Beauty-High FOMO, Exclusive and One-Time Content and CTAs
1.Gamification
-Beauty Confessions
-Beauty + Truth & Dare
-Beauty +Dating/Beauty Routines Together
Call to Action
Because of the one-time nature of the event and a higher emotional value, brands could offer customized gift boxes, with beauty products & other items and exclusive deals to these consumers, in line with the topic of the room/conversation.
2.Shows
-Beauty & Awards
-Tonight Show with Celebrities
-Mixer Parties with Celebrities
Call To Action
The moderator would send the audience to an awards voting page or sign up for gifts and prizes for the best question/answer with the celebrity.
3.Contests
-Beauty Accelerator Results
-Beauty Giveaways and Contests
-Beauty Debates and Humour
Call To Action
The audience could go to a particular brand page and enroll for giveaways ranging from complimentary to winners of the contest.
Alternatively, brands could offer paid opportunities to winners of debates and comedy shows in brand content and campaigns, thereby reducing the cost of hiring professionals and big influencers, making it a win-win for both.
4.CrowdSourcing
-Ideas
-Funding
-Influencers
Call To Action
Brands could offer co-development collaborations for a new product or campaign development with a % commission on sales. Brands could also interview and shortlist influencers to work with in the future.
5.Launches
-Musical around Beauty
-Exclusive Product Launch
-Early Bird
Call To Action
The audience could get limited edition merchandising & products, aligned and co-branded with the event/room, by signing up on the landing page.
Subscription Vs. Ticketing
The choice of strategy is totally up to the content creator. Subscription might require a high volume of content, a great variety of rooms, and a very high club membership/follower count. Still, it’s easier to retain subscription members than selling tickets every time, which also has the headache of organizing highly valued experiences with little to no continuity.
Brands are likely to endorse a complete season or different rooms, subscription or ticketing, under the same club for a particular sponsorship amount considering the number of audience in a room will be limited for the magic zone. In the end, the maths should work for the brand irrespective of the objective around a brand funnel stage.
Conclusion
Clubhouse rolled out the tipping option for a few beta users last week, but that’s just the start, as it paves the way for understanding the roadmap for other monetization models for content creators.
The app has declared time and again about its policy and preference for Creator First, which is the right way to go for the app’s live and drop-in audio nature.
Since there is no visual or audio recording, the app’s success depends solely on the content creators’ creativity to create intriguing and engaging content that captivates and pulls the users back to the app ever so frequently.
I elaborated on two monetization models, which, admittedly, the app is going to roll out soon: “Subscription” to a club/moderator for access to premium rooms and “Tickets” for premium rooms/events.
Content creators will have to use a volume strategy for maximizing profitability with the subscription model. The subscription fee would have to be nominal, requiring a high number of club members and a large number of different rooms, since room size is limited for the magic zone, a clear Clubhouse preference.
The subscription model’s content format would involve rooms with seasons involving regular episodes offering a high volume of content and thus increased value to a subscriber, who won’t attend all the different types of rooms.
Content Creators will partner with each other on the platform for this model.
Brands would sponsor rooms and also help with creative resources and audience. Examples of beauty content for the subscription model would be courses, Q&A, Founders chat, Tips & Tricks, and Beauty Fails with relevant CTAs to put the consumers, the audience, into the brand funnel, starting from awareness to trial to loyalty and brand tribe.
With the ticketing monetization model, content creators would use an innovation strategy for maximizing profitability since the events are likely to be high in experiential value, exclusive & one-time, etc., justifying a much higher price. Partnerships with creative resources and celebrities outside of Clubhouse would be crucial.
For Innovation, content creators would have to combine Beauty with an event/conversation high in experiential value such as gamification, awards, shows, exclusive launch, theatre, etc.
While it is not clear how the app will evolve post-pandemic, the content creators’ motivation is critical for engaging the audience. Otherwise, the app runs the risk of becoming a mere facilitator of conversations between like-minded, random people.
I cannot predict the future of Clubhouse, but it would be better if they rolled out all the monetization models sooner than later, I am sure they are tuned in and listening!
Are you a beauty brand or a creative content creator who wants to get Clubhouse right? Feel free to book a consultation below!
ROHIT BANOTA, Founder of StorySaves, has transformed dozens into envied beauty brands for sharp and profitable growth, kickstarted from day 1 with “strategic brand story” and “story-led brand strategy” & powered by digital.
He has over 17 years of marketing and business experience growing consumer packaged brands including with startups and MNCs like P&G Beauty and Grooming in North America, Europe and rest of the world.