Tuesday, Bloomberg revealed a new fundraising project on the Clubhouse app page. The previous one had taken place in January and raised its valuation to $ 1 billion. This time she is aiming for one Valuation at $ 4 billion, i.e. 4 times more in 4 months …
A clubhouse bubble?
The clubhouse, which started in April 2020, offers its users the opportunity to create radio broadcasts. Carried by the pandemic and various lockdowns around the world, the application started a big trend called live audio after the podcast. The small equipment (a microphone worthy of the name and a stable connection) required for this type of content has attracted some internet users to take an interest in it.
A controlled enthusiasm
However, the development phase of the clubhouse was slow. For a pure marketing strategy or for fear that the servers will explode at the same time as the hosting costs, the application is only accessible by invitation. Clubhouse initially focused on the US and required three invitations (sometimes 5, then 7) per user. It took some time before it was exported to Europe. Only 13 million downloads are counted. This development is even slowed down by the lack of a version of Android, which has been in development since the beginning of the year.
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Monetization Without Income?
The enthusiasm for Clubhouse led to the emergence of a type of user who was qualified as a “creator”. Like the developers at TikTok, Instagram, YouTube or Twitch, they have made the app one of their main channels for delivering content. So Paul Davison, CEO of the company, started the Clubhouse Creator First program. Its job is to support around twenty users by giving them advice on how to better build their presence in the application and, most importantly, to help them monetize their programs. Additionally, Clubhouse recently announced an integrated payment solution in partnership with Stripe. It should allow creators to receive donations from their audience.
“Our goal from the beginning was to create a platform that gives priority to developers. Our goal is to help them build community, audience, and impact. And as Clubhouse continues to grow, it’s important for us to align our business model with that of the developers and help them make money and thrive on the platform, ”the company’s announcement said. When the company talks about an economic model, it promises that it will take “nothing” in the transactions. A claim that sounds strangely false when trying to make money.
Data protection and security gaps
On the other hand, Clubhouse has to face serious criticisms with regard to the security of its use and the processing of personal data. The popularity of political and economic figures in France as well as a petition prompted the CNIL to open an investigation. The consequences of this investigation could be extended to all of Europe as the GDPR takes precedence.
On the security side, Clubhouse was selected at the beginning of the year primarily because of one of its service providers: Agora. The Chinese company provides real-time recording technology for the application. Thus, all audio tracks and metadata of all salons of the application are recorded. The problem is that the company is subject to cybersecurity rules imposed by China. If the country decides that a discussion threatens national security, “Agora has a legal obligation to help the government identify, store and share it,” a report said.
Clubhouse was quick to respond, saying that user data was protected and that it was working to make its app more secure. A few days later, a developer posted his Android version of Clubhouse on GitHub. Thanks to his code, however, it was possible to listen to conversations without access or invitations. Are there other similar or even more harmful tools if the app quickly blocked the channels in use? “All users should assume that all conversations are being recorded,” said John Furrier, Publishing Director of siliconeANGLEMedia that specialize in cybersecurity that exposed this flaw.
Clubhouse’s fundraising project would bring its valuation to $ 4 billion. A sum that seems disproportionate to their ability to stand out as a service and as a creator of technology. Based on Agora for the audio part, Clubhouse doesn’t seem to have created an innovative solution that would represent an intangible asset. The number of users is still low, although a version of Android could speed things up. The data processing and the security it offers seem to be sub-optimal. Eventually, sizeable competitors are gradually arriving with their live audio capabilities.
Live audio everywhere, clubhouse nowhere?
Right before Clubhouse launched, Twitter revealed a new experience called Spaces. It gives users the ability to create a small room that can currently accommodate 10 people. The social network has been expanding this functionality for a few weeks and is even preparing a PC version. Live audio would no longer only be available on mobile devices, and developers could use a different microphone than their speakerphone or phone.
Another giant, Facebook, is also preparing its offensive with a feature called Live Audio. It would complement the Messenger Rooms launched a year ago that allow you to video chat with Instagram and WhatsApp.
The clubhouse popular with entrepreneurs is no surprise to learn that LinkedIn is working on a similar … if not very similar approach. Currently in the testing phase, its introduction could seriously hamper retention of clubhouse users.
If we can stick with these three main social networks, then three other players are working to adapt their platform to live audio. This is particularly the case with Spotify with the takeover of Betty Labs, but also with Discord with Stage Channels and finally with Slack, but to a lesser extent.
How can clubhouse differ from others? It’s not Facebook, it’s not LinkedIn, it’s not Twitter, it’s a neutral platform that, despite some shortcomings, is still attracting. We can also add its intimate side. Personalities such as Mark Zuckerberg, Ashton Kutcher, Cédric O, Xavier Niel, and Elon Musk are suitable for this exercise from time to time. Would you be tempted to do so on Twitter, LinkedIn, or Facebook? Maybe, but they did it in the clubhouse first. However, novelty is not what adds value to an application. Without a concrete economic model, it seems difficult to imagine that it could survive a few years.