Six Ways New Social Companies Will Monetize

Social Strikes Back is a series exploring the next generation of social networks and how they’re shaping the future of consumer tech. See more at a16z.com/social-strikes-back.

For social platforms, the traditional ad model has been dominant for decades. Facebook, Instagram, Snapchat, and Twitter built empires on it. That entrenched model is viable (and hugely profitable) because of the sophistication and sheer scale of data that big tech is collecting. Those tools have taken decades to build.

But what about emerging entrants in the social sphere—those without the scale, user penetration, and hyper-personalized targeting capabilities of the giants? Today, many social companies are experimenting with new monetization models, taking a page from China, the gaming industry, and early ad-adverse pioneers like Tinder, Spotify, and Venmo.

There are two avenues for this model: direct subscriptions to the platform or subscriptions to a specific creator (in which the platform takes a cut). The former route is more established: Weibo introduced VIP memberships in 2012, and YouTube launched its ad-free Premium service in 2014. (YouTube Premium was eventually rebranded in 2018 with additional features like original content and YouTube music access.) But while direct subscriptions have been more common thus far, we see promise in creator-led subscriptions.

Subscriptions allow followers to self-select into different tiers based on their level of engagement. A creator’s superfans—or “true fans”—are often willing to pay for additional content, exclusive access, or direct interaction with the creator. This creates a valuable community in which creators can engage with their followers and, importantly, superfans can identify and interact with each other. Zebra IQ, for example, is a VIP membership platform where creators can try out experimental content on a smaller, devoted audience, as opposed to pursuing virality for the sake of ad impressions.

Since this reduces creators’ reliance on brand sponsorships, it can also lead to more authentic promotional content. That sense of authenticity may be particularly important for younger followers, who crave connection and relatability. The risk of sponcon fatigue is real: in one instance this spring, Arii, a social media influencer with more than 2.6 million followers sold less than three dozen T-shirts on Instagram.

However, there are also drawbacks to this strategy. Since content reaches fewer people, it can be a difficult sell for up-and-coming creators focused on building their followings. And once large creators come to understand their own conversion funnel from viewers to subscribers, they may disintermediate and set up their own infrastructure and community. That limits the platforms’ take rate and pushes them to deliver more value for creators.

The idea that social platforms can spur commerce is not new: Pinterest was an early pioneer in this space, and TikTok and Instagram have made recent strides. In May, Instagram released Shops, where businesses can display their Shopify inventory on Instagram in real-time. This fall, TikTok announced a partnership with Shopify that allows merchants to create marketing campaigns and track analytics on the TikTok app from their Shopify accounts. For existing platforms expanding into shopping, the key here is in making sure that a push into commerce doesn’t affect users’ personalized content algorithms.

There’s also ample room for new entrants. Platforms like PopShop, Whatnot, Huddle and Lit Live are tackling livestream shopping—already a popular phenomenon in China—while others, like The Landing and The Newness, focus on vertical categories such as interior design and beauty, respectively.

Incentives align when the creator is an expert in his or her particular product category: the platform takes a cut, the third-party brand makes a sale, the creator monetizes their expertise, and the consumer purchases products with higher confidence (and often, entertainment value).

These can take the form of “ticketed” shows, one-on-one interactions, or group meet-ups. Similar to paid VIP subscriptions, premium live events give followers exclusive access or content, but are typically one-time purchases. Since this is a relatively new medium—one that has been accelerated by COVID—the playbook is still emerging. At its best, this model helps creators filter out their true fans and foster a more dynamic, engaged community. Since virtual experiences enable anyone from anywhere in the world to attend, platforms can capitalize on network effects. Moment House, Headliner, and others are working to reimagine what a digital concert looks like, striving to combine the real-time experience of YouTube Live, the ticketing capabilities of StubHub, and the community component of Twitch

These companies allow users to engage with others that share particular interests or face similar challenges, often centered around mental health, wellness, career guidance, or fitness. Users join these personal or professional communities in pursuit of intimacy and connection, while the platforms act as matchmakers, aggregating demand and connecting like-minded peers with top creators and experts. In addition, the platforms often provide community-building software or curricula to guide users’ development. Pace, Top Knot, and The Grand, for instance, are all peer-based mental health or personal growth groups that offer expert guidance in live or pre-recorded sessions.

While these community-based programs are often more affordable than one-on-one therapy or coaching sessions, membership can still be steep, typically ranging from $50 to several hundred dollars per month.

In-app purchases are increasingly popular in China, where it’s common for fans to “tip” streamers with digital goods that are convertible to cash. With this model, emerging social platforms can monetize without relying on creators or exclusive content. While digital goods and in-app currencies are still comparatively rare in the US, they’re becoming increasingly popular in games.

The hit game Among Us, for example, is free to play, but if users want to personalize their character’s outfit or acquire an in-game pet, they can do so by purchasing digital goods. Once a digital item is purchased, it stays with the user as they transition from game to game. Digital fashion is also becoming increasingly luxe: Gucci recently released a limited-edition collection for the fashion game Drest.

Beyond gaming, virtual goods are fairly nascent in the US. That said, we’ve seen some promising experimentation in dating apps like Tinder, Bumble, and Coffee Meets Bagel, where users can pay for the ability to receive more matches, boost their profile among potential suitors, or extend the response time allotted before a match expires.

Livestream tipping has become a $10 billion industry in China, where it’s popular on entertainment and ecommerce platforms such as Taobao Live, Douyin, and Kuaishou. There, top streamers can earn more than $16,000 USD a month in virtual gifts from fans.

Since Twitch launched tipping in 2017, we’ve seen early signs that it’s catching on in the U.S., often via donation platforms or common P2P apps like Venmo and PayPal. Clash, for instance, is a short video platform similar to TikTok where tipping is a key revenue source for creators (and Clash takes a cut). Such platforms provide users with easy-to-use content creation tools, as well as video sharing, hosting, and discoverability to help build their fanbases. And because tipping is most effective when it’s live, disintermediation is unlikely; a combination of peer pressure and FOMO encourages viewers to remain on-platform.

For creators, of course, this source of revenue can be difficult to predict. As a result, many creators end up combining tipping with other monetization channels.

The reigning ad model is becoming less viable for emerging social platforms—and less enticing for creators. Through new monetization tactics such as tiered subscriptions, social ecommerce, paid vertical communities, and more, creators and social platforms are seeking renewed agency and control over their revenue streams and take rates. As the consumer social landscape becomes increasingly verticalized, platforms are likely to evolve beyond ads into models that better align the interests of creator, consumer, and company.

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

Social Strikes Back is a series exploring the next generation of social networks and how they’re shaping the future of consumer tech. See more at a16z.com/social-strikes-back.

Over the past year, it’s become obvious (sometimes painfully so) that video consumption is on the rise. Americans are Zooming into work meetings, logging into online classrooms, FaceTiming friends and family, and streaming entertainment more than ever before (binge-watching and gaming are up 25 percent and 75 percent, respectively). But this screentime swell began well before COVID hit. Since 2015, video streaming has risen 13 percent year-over-year. In addition, we’re spending more and more time watching on our phones: Americans spent an average of 42 minutes a day viewing digital video on their phones last year, compared to 23 minutes on their computers.

Now, we’re about to enter a whole new era of video-first products that extend far beyond entertainment and gaming. If phase one of video was a laid-back experience, video 2.0 will be far more interactive and participatory, with users engaging with the platform, giving direct feedback on the content, and fundamentally shaping the experience in real time. This video-first future will enable more engaging, gratifying and geographically unconstrained social experiences than ever before. Watch a basketball game with your friend who lives on the other side of the country? Shop directly with a sales associate without having to step foot in a store? With this new era of video, all formerly in-person engagements are candidates for reinvention. How did we get to this moment?

There have been three distinct eras of modern video.

The first era was, of course, television. TV was controlled by people with very big budgets and luxurious amounts of lead time to plan and produce shows—all of which ran for a standard 30 or 60 minutes.

In the second era, YouTube broke the mold and took away those time constraints, unleashing a brand new type of content category. Now videos can be 1 minute, 10 minutes, or even 24 hours long. In addition, YouTube allowed anyone to be a creator. If you had a ring light and some nice camera equipment, you could be publishing video directly from your living room. Furthermore, those videos could be published immediately so more content could be timely.

Then we entered the third era—the TikTok era—where video has been condensed to one minute or less. Some of the best TikTok videos are only 10 or 20 seconds long. This creates an interesting flywheel: forget all the gadgetry you once needed to look legit on YouTube; now all you need is a smartphone. We’re using our phones to create videos, engage with them, and watch more videos. This perpetual flywheel is what has allowed TikTok to become the fastest growing social network in the world: TikTok reached 1 billion monthly active users in just four years, half the time it took Facebook, Instagram, and YouTube.

What makes TikTok so magical? Real-time interactivity is baked into the viewing experience, rather than being relegated to the comments. TikTok users are scrolling away the videos they don’t like, hearting the ones they do, reacting, and following creators. TikTok has fundamentally changed the way we think about video, and through the interactivity it is able to personalize our feeds with an extremely high hit rate. In the future—and, increasingly, the present—video is no longer going to be something that we passively watch; it’s going to be something that we do.

Think about all the social video interactions that we can have with our tutors, our coworkers, our fitness instructors, and more. Video will soon become the backbone of a whole new suite of vertical platforms. Conferences, classrooms, dates, group fitness, tutoring sessions, healthcare appointments—all the interactions we used to think had to happen face-to-face—we’re now finding out these interactions work just as well, if not better, in a video world. There’s a whole category of tools that will enable this revolution.

There are many areas where video-first is going to dramatically impact society and our social interactions. These are just a few examples.

Students in much of the country are still grappling with the transition to remote and hybrid learning. While instructors and students are valiantly adjusting to the new norm, in many cases kids are still lost in a “Brady Bunch” grid of faces. It’s often difficult to maintain students’ attention for hours at a time, particularly for younger pupils. Contrast that current reality with this education platform in China:

In this particular example, a classroom of students is reading a book together with the teacher. A student is “called out” to answer a question, and when she gets it right, you see a virtual sticker flying across the screen. Through this built-in interactivity, video can enhance the excitement of mastering a subject and the motivation to learn.

The same platform also incorporates various tools for teachers. For example, instructors can give real-time quizzes to get a clear and immediate understanding of student comprehension and refocus the lesson accordingly. That kind of instantaneous feedback is difficult to generate in a real-life setting classroom. Video-first teaching platforms can unleash a range of new tools for teachers.

Another increasingly popular example is what I like to think of as “math meets Mickey Mouse.” These types of platforms take academic curriculum and mix it with fun. The resulting edutainment is a hit for both kids and parents. How can a customer churn when their kid likes their class as much as Saturday morning cartoons and video games? In these kid-friendly entertaining education platforms, kids get that immediate feedback and virtual rewards whenever they get an answer right. Here’s an example of one such platform in China:

Video ecommerce is another massive opportunity. Consider today’s Instagram ads. Sure, they’re video, but what they really are is shortened commercials. Contrast that with different kinds of shopping apps that are already live and widely adopted in China. This particular app video is from JD.com, a popular shopping website in China. In this app, you can see a celebrity hosting a video marathon.

Imagine Bono or Beyonce doing QVC, but doing it in an interactive way where they can answer questions directly, where shoppers can “heart” and show feedback, and where browsers can claim different offers. It’s like Black Friday, every Friday. The video shopping that we experience in the US today is still nascent compared to what’s possible. This kind of video format is thriving in developing countries. We believe the same kind of behaviors will come to the US as well.

Education and shopping are both areas where video dramatically changes the user experience and makes it incredibly interactive. But another benefit of video-first platforms is their huge impact on unit economics and the ability to grow the entire market.

Think about learning a brand new skill, like learning to play the piano. There are new video-first platforms that make the cost of a piano lesson 10X cheaper and 10X more accessible, allowing parents all over Asia to give their kids the gift of music. In the example below, you can see a child getting direct feedback from a teacher sitting right next to them.

For many, the problem with traditional, analog piano lessons is the travel time and expense involved. Often, classes cost much more in cities than in rural areas. But what if the teacher didn’t have to sit next to you? What if the teacher didn’t even have to be in the same country as you? That’s exactly what the startup Peilian does. It allows video instructors to give real-time feedback to students without having to be in the same city, or even the same time zone.

As a result, classes are one-fifth the cost of a typical, in-person class. Think about all the other features that can be added with machine learning and AI—these teachers can become incredibly efficient at delivering feedback to students. Learning a new skill is a great example of how video makes something 10X cheaper and 10X more accessible.

The social opportunities in this space fall into two categories:

We’re already seeing strong examples of video-first platforms that are upgrading the typical in-person experience in the U.S., too. ZipSchool is creating an interactive iteration of Sesame Street—complete with stickers and animation—for kids to learn drawing, singing, and other extracurricular activities. Lunchclub is reinventing the drudgery of networking by matching users with like-minded professionals from the comfort of their office or their living room; the ROI is much higher than the usual blind meet-up at a coffee shop. Run the World is at the forefront of digital conferences, far beyond one-to-many streaming. The platform enables all the interactions that normally occur at a physical conference—from breakout sessions to audience Q&As to hallway conversations and smart networking—in a video-first framework. And there are other sectors still waiting to be disrupted—what an efficient way to speed date! Or dance lessons with Steezy, where everyone can practice dance moves in the safety of their living rooms. In China, Tangdou has taught over 200 million users how to dance. In real estate, recruiting, and beyond, the sectors that will be disrupted are endless.

Secondly, tools like Mux and Descript are examples of how developers can incorporate video into their apps via very simple technology. By using APIs, Mux allows almost any app to easily add video functionality. Similarly, Descript makes editing video and audio as simple as editing a Word document. We believe many of the video-first platforms of tomorrow will be built on top of these types of video tools.

Those who view the present as a harbinger of our future—a purgatory of glitchy video meetings, zoned-out kids, and an onslaught of irrelevant ads—fail to see the true potential of video. Video is evolving from an add-on to a requisite. Through innovative new platforms and integrated tools, video is dramatically reinventing the way we shop, learn, work out, network, even party. Video can turn intimidating or awkward tasks like learning a new language or making professional connections more engaging, interactive, and fun. That vision has already been realized elsewhere around the world; now the pandemic has accelerated video-first innovation here.

Soon retail will be revitalized by compulsively watchable, instantly shoppable commercials. Virtual classrooms will transition from passive, static lectures into interactive, engaging, mind-expanding games and entertainment. And learning new skills and connecting with new people will become more accessible, affordable, and convenient than ever. We’re in the midst of an important shift: from observers to active, native, video-first participants.

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

Social Strikes Back is a series exploring the next generation of social networks and how they’re shaping the future of consumer tech. See more at a16z.com/social-strikes-back.

Audio has become omnipresent: we command our lights and music to match our moods, we ask Google or Siri to settle our bets, we wake up with Spotify and fall asleep to podcasts. Everywhere around us, dumb products are getting an AI education—and with every “smart” (questionably useful) upgrade comes more speakers and microphones. That’s enabling new audio interactions that didn’t exist a decade ago, as well as deeper, more intimate, and more spontaneous social connections than ever before.

But there’s a lot more to audio than podcasts and smart assistants. In fact, we anticipate that the audio innovation of the next decade will rival what we’ve seen in video apps over the past few years.

The draw of audio apps over other traditional formats is obvious to any podcast (and music) devotee: the ease. That lean-back, hands-free experience means that audio apps generally don’t compete with a vast competitive library of other startups. Instead, they compete with washing dishes, working out, driving. This dynamic is akin to the competitive landscape for mobile apps 10 years ago. Early entrants were competing with waiting in line, sitting in bed, and staring at the ceiling while riding a bus—and achieved hypergrowth, as a result. Easy competition! Today, traditional apps are just one notification or swipe away from losing users to Instagram, iMessage, or thousands of other engaging apps. In contrast, audio startups face a less crowded and less competitive landscape.

Unlike much of social media, which just shows the highlights—the amazing travel adventures, the huge mansions and cars, fitness influencers, or people with amazing dance skills—audio hits different. Listening to someone’s voice is personal, and hearing unedited audio is the opposite of seeing the highlights. It’s about ideas, not the visuals, so it emphasizes a different kind of content that can often feel deeper and more intellectually stimulating. When you listen to Elon Musk get interviewed by Joe Rogan for two hours, you may begin to develop a deeper understanding of how he thinks—beyond the headlines. When you listen to a comedian like Tina Fey read her autobiographical audiobook over multiple hours, you start to feel an emotional bond with the person. When you listen to a live conversation on Clubhouse and hear people talk over each other, all the “ums,” and sometimes awkward silences, it reminds you—in a shelter-in-place era—what a lively dinner conversation is supposed to feel like.

The most obvious killer app for audio is podcasting. In recent years, listening to podcasts has become more mainstream; today, more than half the US population has listened to roughly a million shows. In parallel, we’ve seen the rise of more podcast creators, and much more volume, thanks to podcasting tools and hardware. With tools like Descript (which democratizes the editing of podcasts and videos), Anchor (which makes hosting and distribution easier), and others, you don’t even need a fancy mic or studio setup to participate in the experience. The content creators behind shows like Joe Rogan, Call Her Daddy, and others are already highly sought after, paid millions of dollars to reach millions of fans. But while podcasting is a massive, growing market—and we’re certainly excited to see further innovations there—it’s often solitary and one-sided. We believe there’s even more opportunity for audio-first products that go beyond passive listening.

In particular, we’re excited to see the emergence of platforms that provide user-generated content, live conversations, and other social interactions; a counterpoint to the highly produced, one-way nature of audiobooks and podcasts. That emotion that audio can stoke—the swell of a concert, a baby’s laugh, the roar of a stadium crowd—is inherently social. Podcasting scratches the surface, in that it’s a network of user-generated creators and listeners, but there’s ample opportunity to go deeper.

To glimpse where social+ audio might go, social+ video provides a good point of comparison. Though YouTube has dominated the video landscape in the 15 years since its founding, it has since been joined by a small army of powerful challengers and upstarts. Today, “video” spans a broad family of ideas and business models, including YouTube’s short video clips, Zoom’s video conferences, Snapchat’s stories, Twitch’s live streaming, TikTok’s dance videos, and dozens more variations. This encompasses not only stand-alone video products, but also embedded features within other products: collaboration tools, messaging apps, and much more. “Video” refers to far more than just the technical format. Who creates the video? How is it delivered? When is it seen? Why was it sent? And what actions are the viewers invited to take? These questions all matter—and they define products much more deeply than the blanket term of “video apps.” Remarkably, rather than a single product coming to dominate all forms of video, TikTok, Twitch, and YouTube have all come to inhabit different corners of the market, each independently worth many billions of dollars.

Looking at audio through the lens of the user experience, the interactions are similar to video in some ways and radically different in others. Like video, audio can provide a lean-back experience that users can enjoy for hours at a time. Just as it’s compelling to watch influencers and celebrities, it’s also enjoyable to listen to them—particularly in comedy, sports, news, politics, and other “talk radio” categories that have had massive adoption in the radio era. In addition, audio, like video, lends itself well to fiction, non-fiction, and many other categories. Video is easily created by everyone, thanks to the camera on our pocket-sized supercomputers; similarly, it’s familiar and easy to create audio content using our phones. However, audio also scales to professional settings, where podcasting has demonstrated the power of high-quality, edited audio content.

In the same way, though audio apps may have begun with podcasting and audio books, I’m convinced we’re on the front-end of a decade of innovation in social audio experiences.

To see how future innovation might progress, it’s helpful to survey the current social-audio product landscape in abstract and break down some of the defining attributes. There are many existing audio use cases that can be categorized in various different ways.

One way to describe podcasting, for example, is that it’s a user-generated network. It consists mostly of semi-professional content creators broadcasting to a wide, public audience on a horizontal set of products and protocols. Users often discover new podcasts by following their favorite creators. The interaction is generally one-way, and the business model is advertising.

Similarly, we can use this type of language to break down a second category of social audio, a group call between three friends. There are many apps that can facilitate this, including FaceTime, which creates small networks of ephemeral conversation. It’s socially motivated and it’s a lean-forward experience, since everyone is expected to talk.

An app like Clubhouse provides yet another example. The experience is somewhere between a conference call, a podcast, and a live talk show. Although the content is ephemeral, like a phone call, it’s also a horizontal and public platform, which is more like live podcasting.

Once we start to enumerate different social audio ideas, attributes, and use cases, an interesting set of patterns emerges.

This list of product attributes is not meant to be exhaustive. Rather, it’s an initial framework designed to further our collective thinking of what might be possible in audio, particularly when many of these aspects are combined into a single product. If you were to mix and match each of the attributes above, there are many thousands of possible configurations that might lead to new, cohesive products.

Of course, I don’t expect each of these attributes to attract equal attention from entrepreneurs. Innovation will likely focus on a few leading decisions, which then help drive related attributes. Given that groundwork, I believe three themes will emerge: innovation in the content format, the evolution of the business model, and the growing ubiquity of audio.

One key product decision is the form factor of the content. On one end of the spectrum, we have seen products succeed in facilitating very short-form, easy-to-create written and video content—think Twitter and Snapchat Stories. On the opposite end of the spectrum, long-form writing has seen success on blogging platforms like WordPress and new platforms like Substack; long-form videos live on YouTube, as well as professional platforms like Netflix and Hulu. In the same way, both long- and short-form content are likely to thrive on audio-first platforms.

Real-time voice communication is easy to create—particularly one short reply at a time—but is messy and full of digressions. If the effect is too unpolished, it might be less interesting for the listener. This is the Twitter analog for social audio. Clubhouse is one implementation of this idea (among others), but there are likely to be other approaches: some might be asynchronous rather than live, or focused on a particular niche of creators (comedians? news analysts? sports announcers?). On the long-form end of the spectrum, I expect there to be a rapid evolution from the podcasts and audiobooks of today. A future product might be long-form, with a twist—maybe it focuses on high-quality educational content or short stories from prominent authors. Perhaps the innovation will happen at the technology level, where a new platform could integrate monetization and tooling. Or perhaps the product will be built with social features so that listeners can interact with the content. There are many promising combinations.

The business model for content creation online has been evolving in recent years and is likely to accelerate in a world of audio and social platforms. In the past few years, startups like Substack, Patreon, and Shopify have created alternative ways for creators to build businesses online through direct transactions, rather than advertising. This shift exposed a simple fact: in an ad-driven world, creators were generally under-monetizing their audiences. Fans of creators were willing to pay more—a lot more. Newsletter authors like Jonah Goldberg of The Dispatch, for instance, can generate millions of dollars per year directly from reader subscriptions. The same trend is likely to happen in audio, where the podcast advertising business model is small relative to its adoption—under $1 billion—and unlikely to keep pace when rigorous targeting, measurement, and ROI tracking is stymied by archaic underlying technology. Instead, it’s likely that creators will figure out how to directly charge their audiences. This might happen in the form of freemium—in which the basic service is free, but advanced features or product offerings are paid—perhaps through ticket sales to live events, or unlocking libraries of pre-recorded content. Combine these unique business models with a novel audio format or method of interaction and you might get something that really flies. After all, it wasn’t until a “native” monetization method for search—sponsored keywords—was combined with the core interaction of the product that Google became what it was. In the near future, we will likely transcend sponsored promos to truly native social audio monetization, unlocking the next generation of social companies.

The final theme is around ubiquity. In examining how messaging and chat has evolved, there has been a bifurcation between stand-alone apps and embedded features. Slack and WhatsApp are two examples of destinations for messaging: users build up distinct social networks of friends and colleagues and use these apps to communicate with them. But the other thing that happened to messaging is that it has gotten baked into many, many other apps—into Yelp’s UI to reach out to local businesses, for example, or into Uber’s ability to contact your driver. Snapchat’s Stories feature famously originated within the photo/video messaging app, but now exists as part of LinkedIn’s professional networking feature set. The same transition is likely to happen in audio. We are already seeing inklings of this: Discord’s voice features to talk to other gamers is just one of several communication options within the network; text-driven services like Twitter are already offering the option of “voice tweets.” As these features are integrated into more platforms and the volume of audio content grows, it will be increasingly likely to be incorporated as part of Alexa, smart appliances, in-car systems, and more. Such audio services may even fade into the background over time. Just as many apps today support messaging, over time they’re likely to support synchronous and asynchronous audio, as well.

Behavior is shaped by the constraints of technology, and in turn, technology is pushed forward by the needs and demands of consumers. When the telegraph was popularized in the 1800s, its rapid rate of transmission made it ideal for urgent and important messages. The invention of the printing press made it much cheaper and faster to create books and manuscripts, spurring a new era of mass media and allowing millions of people to interact with the written word. These inventions created new product categories and consumer demands—to be faster, to allow for voice, to be portable—leading to the telephone, the steam-powered printing press, typewriters, in turn causing the next waves of innovation. In the modern era, history repeats itself.

Audio, now squarely at the intersection of consumer behavior and technological change, is at the precipice of a new wave of innovation. Fueled by RSS, followed by the adoption of AirPods, smart speakers, and more, the demand for audio in the form of podcasts and audiobooks is at an all time high. That, in turn, makes entrepreneurs more adventurous in advancing new social and user-generated methods of creating audio content. The next decade of innovation of audio will likely be as productive and valuable that of messaging, video, and other media to date. Audio will create the next generation of startups in social networking, social content platforms, and publishing, and will be embedded into a wide variety of products and services. Follow the innovation—listen closely.

Our new series, Social Strikes Back, explores the hyper-social future of consumer tech.

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The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

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