Uh-Oh: Musical.ly’s Numbers Are Crashing — Just Like Vine, Dubsmash & Snapchat Before It

Musical.ly's Userbase Is Crashing - Just Like Vine, Dubsmash & Snapchat
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Is Musical.ly truly worth $1 billion?

Earlier this morning, Beijing-based ByteDance Technology Co. acquired popular lip synching app, Musical.ly.

According to the Wall Street Journal, the final sales price will fall between $800 million and $1 billion.  However, sources close to both companies said that ByteDance will purchase the company for $800 million.

ByteDance had also acquired Flipagram earlier this year.  The company reportedly competed against Musical.ly.

In a joint statement, both companies said,

Musical.ly will continue to operate as an independent platform, integrating Bytedance’s global leading AI technology and leveraging its reach in China and key markets across Asia to enhance Musical.ly’s offering to users, creators, and partners.

Musical.ly claims to have over 100 million active users.  Yet, taking a closer look at the numbers, did ByteDance just overpay for a company that has clearly peaked?

Following in Vine and Snapchat’s footsteps.

Late last year, in a surprise announcement, Twitter said that it would shut down Vine.  Right before Twitter’s strong Q3 2016 report, 350 employees were informed that they had to look for new jobs.

Vine had proven a hit several years ago.  Back in 2013, the 6-second video platform had an impressive 40 million users.  Yet, with the rise of strong competition in the mobile market, the service lost younger users, including millennials.  In 2014, Instagram launched 15-second video clip recording.  The move ultimately sank Vine, as company executives failed to innovate in time.

Snapchat has met a similar fate.  Prior to the launch of its predictably inflated IPO, Instagram had launched their Stories feature.  While an exact clone of Snapchat Stories, younger users, including millennials, quickly jumped ship to Instagram Stories.

As with Vine, Snapchat executives have failed to introduce innovative features.  Parent company Snap’s stock reached an all-time low of $11.83 back in August.  The company had also lost $6 billion in revenue overnight last May.  Due to losses outpacing revenue, shares continue struggling at $12.50.

Then there was the absentee leadership.  Its CEO reportedly went on a blissful yacht vacation after the company had lost $15 billion in value last July.  It’s looking like a downward spiral.

Musical.ly may also meet a similar fate.  According to multiple reports, the app’s growth has clearly peaked as the company has failed to “find an audience beyond Millennials.”

Taking a closer look at the numbers, a report released by MiDiA Research shows that the company’s user base has crashed.  The app’s weekly active users (WAU) remained constant at 2.1% in the first two fiscal quarters of 2017.  In Q3 2017, however, the company’s WAU dropped to 1.4%.  If the company has at least 100 million users as it claims, then in just three months, Musical.ly has lost at least 700,000 users.

Competitor Dubsmash, a mobile video messaging application, also reported a similar loss.  The app’s WAU peaked in Q2 2017 at 2.0%.  In Q3 2017, its WAU dramatically shrunk to 0.8%.  Like Musical.ly, Dubsmash has reported a total user base of “more than 100 million people.”  If taken at 100 million just as with Musical.ly, the app has lost at least 120,000 users in three months.

So, is Musical.ly truly worth $800 million?  No.  No, it’s not.

A one trick pony.

But, what happened to the company?  Midia explains where things went wrong.

The problem for Musical.ly is that Snapchat and Instagram do a great job of this for these consumers too.  Musical.ly became a one trick pony that suffered from not being able to use its core functionality as a beachhead for something much bigger.”

Musical.ly has fallen victim to the same plague that sank Vine and will ultimately sink Snapchat: a failure to innovate.  Users, especially younger audiences, have caught on and have already started fleeing the app en masse.  And the same teenage audience that flocks to an app will just as quickly desert it.

With the purchase, ByteDance has the opportunity to create an innovative full-featured music messaging app.  Should it fail to do so, however, it won’t take long to read the following headline:

“Musical.ly has shut down.”


Featured image in the Public Domain.

2 Responses

  1. Shlomo

    Criticizing a company that just sold for $800m. lol Yeah Musical.ly is finished. They lack innovation. lol Musical.ly is easily the most successful music startup in the last years. If they’re out of business soon than everyone in the music technology space is fucked.

    Same article suggests that Snap isn’t innovating. Clearly old very old number pushers wrote that article. Use both products first you dumbass. Every fucking teen in America practically uses both of those apps and they’re not going anywhere. Such bunch of debbie downers.

    Go run a record label into the ground. Morons

    • Andrew

      And ‘teens’ (anecdotally I’d be more precise and say teen and pre-teen girls) do not spend money on Apps and there are no in-App purchases available so how to monetise?

      No adult audience of any note uses it. So how to monetise?

      I know my daughter won’t be using Musical.ly once it is covered in ads or once she is too cool (13/14) to use it. Then it’ll be Instagram. She and her friends never use Snapchat. So how to monetise?

      Anecdotal comments I know. But tech companies cannot and will not be able to just keep burning money and expect to be successful without generating an income. So how to monetise?

      If people won’t buy an App (and as an adult I’d rather pay 79p/99p than have ads interrupting at every turn) and are turned off by ads how exactly does any tech company turn a profit? So how to monetise?

      Having millions and more users (as you rightly say) does not make a business (even a fashionable tech company) successful. Sooner or later investors will stop shovelling money in to pay the workers etc. Then what?

      In the real world ‘successful’ businesses are ones that turn a profit sooner rather than later, not ones that simply give something away free forever.

      This is another App that will be gone in a few years if not sooner: overtaken by some cooler, newer App and consigned to the footnotes of tech history.

      And Shlomo, nobody considers being rude or obnoxious to be clever or big or intelligent. DMN has an opinion different from yours. It doesn’t make them wrong. So why not explain why DMN is wrong with evidenced, thoughtful, intelligent opinion or comment? Novel I know but our brains have that capacity and ability if we engage them.