Why we’re commission-free 💸 (and proud of it) 💪

Clubmarket will earn exactly $0 in fees through our marketplace facilitating brand sponsorship deals. Read how we will make money and our philosophy behind it

Tomer Dean
📅
May 2, 2021

$0. That's the amount we're planning to earn on commission through our marketplace facilitating brand sponsorship deals on Clubhouse.

I’m proud of that and will share our philosophy behind it.

TLDR:

  • Clubhouse introduces a new marketing channel for advertisers.
  • Agencies and commission-marketplaces have an incentive to inflate budgets.
  • Clubmarket is disrupting the traditional (misaligned) commission-based business model by not charging any commission-based fees (zero!)
  • In the future, we will roll out a new type of win-win-win business model

We launched Clubmarket with the promise of connecting brands and content creators on Clubhouse. Clubhouse and its alternatives have introduced a new type of marketing channel which has yet to fulfill its entire potential. Our mission is to empower the creator economy by unlocking the monetization value stored in the social audio medium.

Since the start, we’ve been laser-focused on learning how advertisers & content creators want to collaborate on this channel. At this point, our goal is to learn how to secure deals with minimal friction and maximize the value for both the creators and advertisers. 

To build an effective marketplace, we need to work closely with advertisers & creators. When dealing with partnerships with a financial nature, high level of trust is 🔑. That’s why it's inevitable to disrupt the traditional (misaligned) commission-based business model of the creator marketing industry. 

Why agencies have a misaligned business model

If we look at other creator-based ecosystems, let's say Instagram, we can see they're made up of traditional agencies and matchmaking marketplaces (the classic digital agencies). Both agency-models largely rely on charging a % commission of the spend. The agency earns more when the campaign ad spend increases, giving them a clear incentive to inflate budgets and centralize pricing. 

Brands who are price sensitive have no easy way to understand if the price is fair, reasonable or necessary. The agency has no interest to be transparent with its costs. This is the definition of business model misalignment. This creates low-trust and explains why one third of brands in the USA are considering to move away from agencies in the next 6 months (Source: AdAge)

How can we align the business model?

The honest answer is we're not 100% sure yet. We do know that taking a cut of the campaign or ad spend is not the answer. As we work with the first 100 brands on Clubmarket, we're optimizing for trust. Without a high level of trust, it won't be possible to learn what is the optimal structure for brand sponsorship in the social audio market. This is why we've decided to waive any type of fee or commission on campaign deals we secure for this initial phase.

But how will you earn money?

We won't earn money at the moment. You might be asking yourself how will Clubmarket keep the lights on without any revenue. Simple. By raising capital 💸 from investors who believe in our long-term strategy, we'll be able to focus on what is truly important, strengthening the creator economy.

As we progress into the next stage, we will work closely with our first 100 brands & creators to build a business model that creates a win-win-win. All we can say as of this post, is that we have a preliminary subscription-based model that’s in an early stage of validation. As we progress and receive additional user feedback on the deals made by Clubmarket we will share more. 

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