Can Clubhouse cash in?

Joining the club.
Joining the club.
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Clubhouse had a $1 billion valuation before it had a business plan. On Jan. 24, the company announced its latest fundraising round, along with a rough sketch of the revenue-generating tactics it plans to start testing over the next few months: tips for creators, ticketed events, and paid subscriptions. In the meantime, founders Paul Davison and Rohan Seth are turning on the money spigot with a Creator Grant Program that will put some of their venture capital cash directly in Clubhouse influencers’ pockets.

Davison and Seth (ex-Googlers, both) are hoping they can crack the code for keeping influencers paid, and avoid the cautionary tale of short-form video relic Vine, which lost a third of its top creators in 2015 after balking at their demand for a $1.2 million payout. Vine successor TikTok has been more eager to pay creators and accommodate their requests.

Commanding influencers’ loyalty will be critical, as other companies are  already developing Clubhouse copycats. Twitter launched “Spaces,” its take on a live audio feature, on Dec. 17. Facebook is reportedly developing a similar idea. And Chinese developers were working on their own versions even before Beijing banned Clubhouse and pushed citizens toward homegrown alternatives like YY, Lizhi, and WeChat’s live group chats.

Yet for now, Clubhouse does not appear to be an acquisition target for its well-heeled social media competitors. Some read Mark Zuckerberg’s foray onto the app as an early indication of Facebook’s interest in buying it. But as Digital Content Next CEO Jason Kint points out, that kind of deal will be much harder to pull off in an era of heightened antitrust scrutiny.

By the digits

$100 million: Clubhouse’s January Series B funding round, which took the app to unicorn status

180: Total Clubhouse investors, including leading VCs and a swath of small, independent investors

6 million: Estimated number of registered Clubhouse users

10: Full-time Clubhouse employees as of Feb. 5, according to the Financial Times

$62: Sale price for Clubhouse invites on Chinese marketplace app Xianyu

5,000: Maximum participants allowed in any given Clubhouse room

$300: Cash prize for the best performer in a Clubhouse “moan room” that featured Knives Out actor LaKeith Stanfield

The Elon effect?

Tesla CEO and internet enthusiast Elon Musk has gotten a lot of credit for driving Clubhouse’s recent and explosive growth in popularity. Indeed, shortly after Musk made his first and only appearance on the app on Jan. 31, it blew up in China, Japan, Taiwan, and Hong Kong, jumping from 3 million users to 5 million “almost overnight.”

But data on daily downloads from the mobile app analytics firm Sensor Tower show that Elon jumped into Clubhouse after the app was already on its way to the moon 🚀.

Much more credit arguably belongs to longtime users who created earlier viral moments—like the Clubhouse production of The Lion King—which set the stage for future growth. Many of them are Black creators who made the app their own, including guitarist Bomani X, currently featured on the app’s icon. Black creators helped transform the Clubhouse scene from a tech bro hangout to something more vibrant that could attract a wider audience.

China’s brief moment

“It’s fascinating for me to see how people from different sides [of an issue] are so drawn into having interactions with others, and perhaps curious about others’ viewpoints. I hope such precious time can last a few more days.” —A Taiwanese businessman working in mainland China, after hearing uncensored political discussions on Clubhouse

Nikkei Asia quoted that hopeful user on Feb. 5, a few days into Clubhouse’s meteoric rise in China. For about a week, Chinese users flocked to the app to hold open discussions about the Hong Kong protests, feminism, the experience of being interrogated by Chinese security officials, and the oppression of Uyghurs in Xinjiang Province—conversations that would be unimaginable in other corners of the heavily censored Chinese internet. But the moment didn’t last: By Feb. 8, Beijing had banned the app.

A scroll down the hallway

The main feed in Clubhouse is known as the “hallway,” because as you scroll you pass all the “rooms” where live conversations are happening (get it?). Sometimes, just skimming the list of available rooms is as fun as eavesdropping on an active conversation. Here’s a sampling of what you might see when you finally get that invite:

Image: Giphy

The moderation problem

Clubhouse caught a lot of flak in its early days for launching without any content moderation policies or safety features to speak of. As the app grew—and began hosting its share of hateful conversations—that laissez-faire attitude became untenable. Women, including female tech reporters like The New York Times’ Taylor Lorenz, were harassed without recourse. A group of minor celebrities doxxed and bullied doctors for countering their Covid-19 conspiracy theories. One influencer quit the app in protest over “the continued lack of action by [Clubhouse] in the face of anti-semitism, homophobia, transphobia, misogyny, [and] racism.”

Live audio presents a mountain of moderation challenges. Unlike with text posts, it’s hard for algorithms to automatically block hate speech, harassment, or misinformation when a person is speaking in real-time. Plus, Clubhouse didn’t record conversations in its early days, making it impossible for moderators to go back and review a user’s behavior after a conversation ended.

Clubhouse has since responded by creating community guidelines and updating its terms of service. It created “block,” “mute,” and “report” buttons, and started recording every conversation. (The recording gets deleted if no one reports bad behavior—otherwise it goes to a moderator for review.) The company has also directed some of its venture capital money to hiring more professional moderators, and developing training for users who host and moderate rooms.

As the app continues to grow, moderation will only get harder. Keeping its rooms from devolving into cesspools of hate and harassment will be a critical challenge if Clubhouse hopes to hold on to its current momentum.

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