Clubhouse: Status-signalling in a crowded room


Clubhouse: Status-signalling in a crowded room

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The parameters of success within the social media landscape have largely been consolidated over the last decade. After transitory phases dominated by the likes of Myspace, platforms now considered the relics of a pre-Facebook era, we’ve finally settled into some kind of ‘peacetime’. Although hundreds of copycat startups pop up every year, the established giants seem to have a strong hold on the industry. The latest social media startup that’s garnered significant attention for its splash as an audio-only social media platform is Clubhouse. Still in its beta phase, the platform’s name and exclusive invited beta test user list seems to be cultivating a reputation for highbrow voice-chat rooms. While big name backers like Andreessen Horowitz value the platform at $100 million already, its success post-launch will hinge on more than celebrity investors and endorsements. Network effect is the holy grail for social media platforms as they build out their user base, and Eugene Wei’s extensive breakdown of “status as a service” gives us a great model to contextualise Clubhouse’s foray into this highly sought after industry. 

Status as a service, in a nutshell, is the ability for social media platforms to facilitate status signalling. Platforms use various mechanisms to empower users in accumulating, exchanging and projecting their social capital – the hallmark example Wei proposes is the Facebook Newsfeed. 

“It’s difficult to overstate what a momentous sea change it was for hundreds of millions, and eventually billions, of humans who had grown up competing for status in small tribes, to suddenly be dropped into a talent show competing against every person they had ever met.” – Eugene Wei

When a platform is able to intrinsically tie signal distribution to content creation it creates a sticky cycle of creation and consumption that feeds back into traction and network effect for the platform. This is the philosophy today’s social media giants have built their billions-wide user bases on. Clubhouse with a primarily audio approach to social interaction poses challenges to the status quo model and by virtue of this will face some challenges of its own. We can contextualise Clubhouse in some of the governing parameters of Wei’s status as a service model – a point of comparison to the platform’s largest competitors. 

Social Capital Creation: When it comes to socialising, It is less important what a user’s absolute status is. What matters more is the user’s status relative to those around them. Given this maxim, social capital creation relies heavily on the compounding impact of effectively projecting your existing social capital. In Clubhouse you can either be the host of a chat room or a participant. In this case, the user is either able to rely on importing off-platform social capital or needs to do the work to create platform native social capital – i.e. be the best host or the most vocal participant. We can refer to the effort required to do this as ‘work’. 

Proof of work:  social capital or status is only valuable if it is scarce. Therefore work is required to earn social capital, on other social media platforms this means creating content, posting photos, leaving comments, engaging other users etc. On Clubhouse, where chat rooms are live and not recorded, work translates into live vocal contribution. Here, the proof of work seems to rely on the memory of other users and their inclination to follow you based on the memory of your contribution. In face of this, the effort of creating platform-native social capital i.e. being a good host or a vocal participant, seems to create less return than what a similar level of effort might yield on another platform. Not to mention that the spontaneous nature of live vocal “work” lacks the planning and rigour available in other formats of “work” resulting in higher conversion risk for the content creator. Whether this effort-reward ratio is worth the trouble has a lot to do with the user’s ability to preserve the output, bringing me to the next point. 

Social capital accumulation and storage: Social capital is only valuable if it can be accumulated and stored for exchange. The transient nature of content on Clubhouse means that the “work” users do is temporary and only meaningful for social accumulation if it is converted into a lasting metric (e.g. followers) while still fresh in the memory of other users. This means there is no ‘feed’ or repository where future social capital can be accumulated based on past “work”, whether clubhouse will solve for this with more permanent creation and storage features remains to be seen post-launch. In the case that they choose not to, it would most likely be a willing tradeoff the founders make in return for emulating real world socialising or networking events – where of course you’re only able to signal and compound on your social status within a given room, for a given period of time.

Authentic conversations versus status signalling: a delicate balance

Given the nature of challenges Clubhouse will face, there are – broadly speaking – two directions the platform could opt for. In the first route, Clubhouse could rely on users importing already created social capital from other platforms, focusing on amplifying this signal during the limited period of live participation. The dynamics of this would be very similar to a gathering in the real world, there might be a few people you’ve never met, a few you’ve heard of and occasionally a celebrity guest. This mode, though, doesn’t lend itself to a killer platform because it acts more like an augmented service on top of other social media platforms – user loyalty still defaulting to the other platforms where users are both able to create and store their social capital. 

The second route would focus on the creation of social capital and its retention. Clubhouse could solve for the transient nature of its content and social capital by creating mechanisms that would allow users to signal their popularity with other users – essentially indicating their value add as a chat participant. This could be something akin to a point system within a live environment, think live upvotes or likes – in fact, it could be any number of features already popular on social media. In this way the authenticity of the in person interaction Clubhouse seeks to cultivate would be preserved, just with the additional mechanisms that fuel a social user’s intrinsic motivation for status signalling and affirmation.

Down the Rabbit Hole

1. The psychological imperative for voice and video over text, but both are still a weak substitute for in-person communications

There is no doubt that the nuances of body language, voice inflection and facial expressions are lost when in-person communication is translated into online participation. Our participation online is defined primarily by text and while this is a by-product of technology it is also a deliberate understanding that text-based communications provide a necessary distance between thought and communication. This gap ensures we’re able to overcome our notional inhibitions against communicating with strangers and acquaintances. 

The alarm we feel at an incoming phone call from an acquaintance, or even a friend is already punctuating the miasma of daily life. Imagine if some form of voice or video participation was necessary to build your networks on Facebook, it is unlikely that our circles would be any wider than our WhatsApp groups.  It is therefore not surprising that text is now the primary format of digital participation. 

However, as a whole, the quality of our relationships have a direct and positive correlation to the number of inflections and human physiology we’re exposed to during communication. Audio and video based digital formats then have a strong role to play in network building and community participation, where the effort required can be tied to the utility of that relationship. 

Source: The effects of text, audio, video, and in-person communication on bonding between friends by Lauren E. Sherman, Minas Michikyan, Patricia M. Greenfield

2. The economics and sociology of status

The pursuit of status is an intrinsically human endeavour and satisfies the economic definition of a good and in particular, a private good. Where a good is anything that “satisfies human wants and provides utility”, a private good is both rivalrous (consumption by one consumer prevents simultaneous consumption by another) and excludable (the consumption of the good can be prevented by requiring a form of payment).

“It [status] can be transacted — spent as well as earned. It’s not a terminal good, but rather an intermediate good that helps us acquire other things of value. For example, I can trade some of my status for money, favours, sex, or information — and vice versa.”

Status is transactable because it mimics the properties of money, it can function as a medium of exchange, store of value and a unit of account. But transacting with status is much murkier as it is also subject to human sociology where gossip and politics can devalue the status that has been accumulated by an individual or a group. 

“First there’s national politics, which is driven by status more than we typically admit. As Tyler Cowen argues: Occasionally the real force behind a political ideology is the subconsciously held desire that a certain group of people should not be allowed to rise in relative status.”

While the economic liquidity and transactability of status is motivation enough to explain our collective obsession with obtaining it, sociological and biological factors also provide powerful supporting arguments. 

“…social status is not arbitrary. Instead, it’s grounded, very concretely, in the biology of honest signals — and as such, it’s subject to very real constraints. Wild swings of status are possible, but they’re mostly the stuff of stories. Our daily lives are governed by much smaller — and more predictable — gains and losses.”

“Ultimately, status lives in the minds (and bodies) of all the humans within a given community — by which I mean, primarily, other people’s minds and bodies. You might maintain a sense of your own status, but it’s not really up to you. Status is fundamentally about how others perceive and interact with you (and what they allow you to get away with).” 

Source: The Economics of Social Status – RibbonFarm

3. Ideation and the difficulty of content creation on social media platforms

“The primary concerns for a user-generated content creator on any platform is the ideation of original content and the potential return on effort. Where a user on Youtube may be apprehensive about creating content in such a competitive landscape, TikTok has sanded down the barriers to content creation to almost nil. It does away with the cognitive expense of creating a unique brand, encouraging mimicry as the tether to a larger community and millions of views.” 

Source: TikTok and the Creation Consumption Balance – 4th Quadrant

4. Exposure: Augmenting social media with audio based interactions

Given that Clubhouse will look to import social capital to create initial traction and network effect, it makes logical sense that the other social media platforms could simply implement a similar feature without any need for importing social capital, as it already exists natively for their users. It would be interesting to explore which social media platforms could beneficially augment their existing native utility with an audio implementation like Clubhouse’s live and public voice chat rooms.

In the absence of Clubhouse building robust avenues of social capital creation and retention to prevent its USP from being diluted by bigger more established players, an acquisition could be the eventual outcome. This being said, other platforms will wait to see how Clubhouse fares before attempting an implementation that might dilute their own core utility.

LinkedIn and Twitter would most benefit from a Clubhouse acquisition or similar implementation on their platforms, as it aligns with their native utility. The effort required in hosting a live and public conversation, in both content and engagement would be quite high, and therefore would be more suited for the platforms that form around conversations. LinkedIn for highly engaged topics/content as well as networking and Twitter for anything from catching up with friends to a town hall for politicians. 


Mode of interaction by users on these platformsHow does augmenting the Clubhouse model improve utility and social capital
Primarily closed circles with Groups and Pages as a mode of interacting with users outside their closed circles.The Clubhouse model of live and public chat rooms would not be suitable for the primary mode of use on Facebook which focuses on closed group interactions.

Mode of interaction by users on these platformsHow does augmenting the Clubhouse model improve utility and social capital
Primarily open professional networking environment where the mode of social capital creation requires high effort and maintenance.
Voice based emulation of real-world professional networking can be accessed via the LinkedIn platform to directly augment their connection and profile building efforts. Here the effort required by Clubhouse, in content and participation, fits into the effort usually exerted on LinkedIn for social capital creation.

Mode of interaction by users on these platformsHow does augmenting the Clubhouse model improve utility and social capital
Primarily a vast open network of individuals across many fields. Requires high effort for social capital creation.Voice based emulation of Twitter chats (or Tweet chats) where public conversations are organized around a specific topic. These moderated discussions take place at a predetermined time, with a predetermined hashtag. The issue arises with the overly open nature of Twitter and the heavy moderation that would be required for viral chat rooms.

Mode of interaction by users on these platformsHow does augmenting the Clubhouse model improve utility and social capital
Primarily closed circles with an influencer presence. The Clubhouse model of live and public chat rooms would not be suitable for the primary mode of use on Snapchat which focuses on closed group interactions.

Mode of interaction by users on these platformsHow does augmenting the Clubhouse model improve utility and social capital
Primarily closed circles with an influencer economy that is quite prevalent.Influencers could use it as another tool to engage their users. The issue arises with the ‘effort to reward’ ratio as influencers would have to carry the weight of the conversation.


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