The Snap Inc (NYSE: SNAP) stock price edged 1.16% after announcing that its paid subscription service had added 5 million new users, each paying $3.99 monthly. The subscription service known as Snapchat+ offers subscribers additional features not accessible on the free app version.
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For example, Snapchat+ users have first access to Snap’s AI chatbot and its artificial intelligence selfie generator, which are exciting new features that users are excited to try out. The company also offers features that simplify the app's daily usage, such as pinning a conversation at the top of the inbox and custom wallpapers for chats with friends.
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SNAP launched the paid version of Snapchat in June 2022 as the broader social media industry struggled with low ad revenues and sought new ways to generate additional income. As of April this year, the company had attracted 3 million users to the paid service, with the jump to 5 million users being a new milestone.
Given that Snapchat+ users are paying about $4 monthly, 5 million users would generate about $240 million in revenues per year, which pales in comparison to the $4.6 billion in revenues generated by the company last year.
However, despite the revenues generated by the paid subscription service being small compared to SNAP’s overall revenues, the company could use the monies to offset the costs of developing new features, including incorporating more AI tools.
Other social media companies such as X (formerly Twitter) and Facebook have also introduced paid services that offer users more than the standard free service.
Jack Brody, Snap’s vice president of product, said in an interview: “We’ve seen with Snapchat+ that people are willing to pay. They’re excited to receive early access to experimental, exclusive features, and the more that we bring to the table, the more likely that is to be true.”
“The broader the suite of products we offer, the more likely we are to retain subscribers. They might join for a specific feature that we recently rolled out, but then they see the 20-plus features that we’ve introduced overall, all of which play a role in making sure that this becomes an increasingly valuable service over time.”
SNAP stock price.
The SNAP stock price was trading up 1.16% at $8.73, rising from Thursday’s closing price of $8.63.
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