App.net is Destined for Failure | Hacker News Reader

App.net is Destined for Failure

danr.us

14 pointsruswick20 comments

When TheFacebook launched, you needed a Harvard email account to use it.. which had a much larger cost of entry than App.net's $50 annual fee. It was a tightly wound coil of users that helped prove the model and obtain additional funding.

TheFacebook also had no idea what a large social network they could become and never had the expectations to be what they are now. App.net is mirror itself off Twitter so they obviously know how big its possible to grow. Also TheFacebook was using exclusivity as a motivator to get people to join and request the service for their schools. App.net isn't exclusive its just a paid service and since its not a luxury item its not something people will pay for just for the sake of paying.

Lets be honest here: Facebook makes roughly $0.80 per user per month. App.net most likely will never achieve the dizzying heights of hundreds of million users who are leeching off Twitter and Facebook, but it doesn't need too. As Facebook has proven by their failure of an IPO, their lack of business model has destined them for failure. At least App.net have a business plan right from the beginning, something Twitter and Facebook never had and still to a certain extent still do not have.

The issue with a free service is if the free service is good enough like in the case of Twitter and Facebook even if you offer a premium paid service people aren't going to pay because free is better, free almost always wins. The great thing about App.net is that they're openly telling everyone they will be charging right from the beginning, so App.net won't have to compete with their own free offering which puts them in a great place.

My understanding is that App.net is incorrectly being touted as a Twitter clone, it's more-so a massive real-time API that is going to give developers amazing infrastructure and functionality to implement into their own ideas. Lets be honest if Facebook or Twitter completely opened up their API for $50 per year without any restrictions and a guarantee you won't be screwed over, a lot of people would buy but the problem is Twitter and Facebook are dependent on advertising revenue they wouldn't offer a fully-open API they couldn't make more than $50 a year off of with ads.

I was sceptical at the beginning App.net would be different, but now I am pretty excited at the possibilities of the service. The growth of the funding for this thing is crazy, I doubt App.net will struggle to succeed here. Everyone loves to hate on something instead of coming up with a great idea themselves.

Sounds to me like Dan doesn't know what he's on about here. What is he basing all of this assumptions off of? People gladly pay $99 a year for Apple's developer program, I see App.net being the same in that they offer a service that will help people build great apps they can self-monetise much like the Apple developer program only without restriction.

It's true that App.net won't have to compete against itself, but it will have to compete against Twitter, which is free and already has the momentum.

The API doesn't seem as massive as you think. From what I understand, it's just a read/write API to App.net. Users of these new apps that will be built on App.net will still need an App.net account to use them. App.net is going to be a service, not a protocol or platform. That's not to say that people can't build apps that use this API in interesting ways. Look at what bonfire.im has done on top of Twitter. I'm sure that lots of things can and will be built on App.net. But, at that point, the network just becomes another backend-as-a-service. Not only is that not groundbreaking, but it's going to serve it's purpose poorly, because the apps built on it are limited in scope to users who use App.net. If I wanted to build a service and were choosing a platform, why would I choose one that currently has 9,000 potential users in total?

Yes, how dare this company focus on making as much money as possible.

They should be focusing on getting a ton of VC funding and flipping the company to Facebook instead.

Your argument is essentially "App.net is going to fail because it has a business model." Take a step back and think about that.

The argument is that App.net has a business model that isn't going to work, not that it has a business model at all. A business model doesn't guarantee revenue, here is a business model I am going to sell rubberbands for $1000 a piece and it only costs me $.05 to make them. Great business model but that isn't going to get many people to buy. This is a very niche product that will work if the expectations are kept in check and they understand what they have is a niche product. There is nothing wrong with having such a product you just have to make sure your goals are aligned with that. I wouldn't consider myself the average user for these services (Twitter, Facebook) at all as my knowledge on tech is far beyond the normal user and I have absolutely no issues with the way these services are monetizing. The average consumer who uses the services couldn't care less about the ads nor would they pay anywhere near the amount being proposed.

I for one don't even notice the ads in Twitter. Where are they? That's either a good or bad thing. Good, in that it's not a huge nuisance to me. Bad, in that Twitter isn't doing a great monetizing users.

The ads are sponsored tweets, if you are using an extension like adblock then you probably don't see them but regardless they are very unobtrusive ads that don't pose much of a nuisance.

It will so long as that model inhibits people from joining.

There's no business model without an actual business. That's what the OP is saying.

They've done over $500K in sales in a few weeks, how much money does your "actual business" make?

App.net has a very smart business model. It's goal, at least for now, is not to have millions and millions of average users, or Lady Gagas, or Justin Biebers. It's goal is to attract industry professionals, designers, developers who are willing and who are also capable of paying $50 a year to be part of a limited network. At its early days, I think that App.net will resemble the early Twitter. Its users were people who believed in its success, they were mostly the same demographic that App.net is aiming at now and a lot of great things came of that. The masses didn't believe in Twitter, they found it useless - and it was a much better service back then, without them.

I don't think App.net needs to have more users than Facebook and Twitter to succeed. For social networks these days, quality is better than quantity.

I still don't really understand your argument and I think you missed the point completely. Sustainable sites don't need to grow like Facebook because per user revenues are constant as usership increases, as opposed to Facebook or any add based sites.

If app.net can make a great product, they'll find a way to sell it and people will buy it. Not 900 million people, but many people. Add to this the fact that they could leverage added value in certain key areas like privacy, which facebook can never do, and it doesn't seem so bad for 50$ a year.

A couple of years ago you would have been considered a fool if you thought that a 500$ phone would ever sell.

$50 a year is a lot to a student, or a parent with kids, or someone without a job, or a family with inky one source of income, or if you are one of the billions of people that survive on $1-2 a day.

That's why in places like india, Africa a $500 phone is still seen as laughable. Even ignoring developing countries and emerging economies, charging 50 bucks is going to be a stretch and seems a bit crazy if you want to appeal to people outside of the silicon communities....

But then again I thought twitter was a silly fad

I have no doubt that their product will be nice. However, unless they get gobs and gobs of users, the value of the product will be significantly diminished.

Obviously, a world where millions pay for App.net is great. They thrive as a business, users get a good network without ads. But that's unlikely to happen.

That $500 phone wouldn't have sold if a competing phone that people viewed as indistinguishable and that everyone already used were free.

You don't think it's possible that the $50/year is just a Kickstarter-style price to get early funding, and they're just going to charge $5 a month from here on out?

It seems like your premise bends on the idea that the model is always going to be like this.

$5 a month is $60 a year, which is a price increase.

But it feels like less. $5 is like half a meal at Chipotle. If you can't afford that, I don't know what to say to you. That is not a lot of money.

Did you know that many professional organizations charge $100 per year to join them? How is this different?

I mean, you totally missed my point. I'm not sure what else to say.

Twitter-like messaging should be a protocol, not a single-source service.

I hope App.net fails.

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