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Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

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Vine

Platform to share short looping video clips

General Information
Category
Social Media
Country
United States
Started
In 2012
Business Failure
Business Outcome
Shut Down
Closed
By 2017
Cause of Failure
Multiple Reasons
Founders & Employees
Number of Founders
Three
Name of Founders
Colin Kroll, Dom Hofmann, Rus Yusupov
Number of Employees
Between 51 And 100
Funding
Number of Funding Rounds
1
Total Funding Amount
No Data
Number of Investors
2
Description

-

Cause of Failure

-

If Vine had hundreds of millions of users at its peak, why did it shut down? Why is TikTok doing better than Vine if the two apps are very similar? Read on to find out both the short and long answers to these questions!

What was Vine?

Vine used to be a video hosting social media website which allowed users to create and share 6-second videos. A bit like TikTok (more on that below).

To put the concept in context, you could say that Vine tried to do to YouTube vlogs the same thing that Twitter did to traditional blogs. Twitter advertises itself as a microblogging social media platform because of its character length restrictions and social features (follows, retweets, etc.). Similarly, Vine was a microvlogging platform because of its video length restriction combined with similar social features.

Consequently, it makes a lot of sense that Vine was acquired by Twitter for $30 million before the app even launched. It presented Twitter with a convenient opportunity to compete with the (considerably bigger) social media giants like Facebook and Google on Video content.

Obviously, not everything went according to plan. Despite being innovative and very culturally influential, Vine became a part of tech, startup, and cultural history. Below, we’ll explore why.

When did Vine fail

Why did Vine shut down?

The short answer is: because it was an unprofitable business losing popularity to other similar services, most notably Instagram. Burning money while losing market share simply isn’t sustainable.

The long answer, of course, includes multiple reasons. Why was Vine unprofitable? Why did it start losing popularity despite having the first-mover’s advantage?

Here are the 6 biggest reasons behind Vine’s failure:

1. Vine’s failure to meet market needs:

Vine was initially envisioned as a microvlogging social media platform. People sharing short video clips to their own social circle.

What it became after launch, however, was something quite different - an entertainment media platform. Most of its users were passive viewers consuming the content of a minority of active content creators. More like YouTube, less like Twitter/Facebook/Instagram.

Vine’s whole ecosystem was built on top of the work of the popular content creators, and if they left for any reason the ecosystem would crumble. In that sense, the key to Vine’s success was to make sure it met the needs of its active content creators perfectly in order to keep them engaged on the platform. Vine failed to do that on two key occasions:

First, it stuck to its strict 6-second length for far too long, making it impossible for its content creators to experiment with new types of short-form video content. For example - actual vlogging. You can’t share your opinion on a subject in 6 seconds, but you might be able to do so in a minute.

Second, active content creators spend a lot of time creating content. One of their primary need is a good way to get paid for their efforts, otherwise it simply doesn’t make sense to continue creating high-effort content.

Vine was a good tool to grow an audience, but it was a terrible tool to monetize it. So, it made a lot of sense that once a Viner was big enough, they’d try pushing their audience to other platforms where they’d be able to get paid.

2. Vine’s monetization problems:

The monetization problem was not restricted to the content creators, however – the actual business wasn’t making any money either. Vine was reluctant to experiment with monetization solutions, which is not that uncommon in hyper-growth network-effect startups. This meant, however, that when the growth was gone there was no reason left to keep the service alive.

For example, the money flowing into Vine’s ecosystem was mostly direct sponsorships for the top content creators. Yet, Vine never attempted to include sponsorship solutions into the platform. Twitter bought a social media talent agency to try to monetize indirectly, but this wasn’t a good solution to Vine’s problems. The agency couldn’t incentivize its clients to stay on Vine instead of moving to other competitors, while a good monetization system could’ve been able to.

3. Vine’s competition problems:

Competitors with existing audiences, deep pockets and a good opportunity to move into Vine’s market quickly did so. Short-form video is nowadays a standard feature of a lot of the most popular apps (Instagram, Snapchat, even stories on Facebook, YouTube, etc.).

The first and biggest devastating blow came from Instagram’s 15-sec video feature.

"Instagram video was the beginning of the end" - quote from a former Vine executive from an interview with The Verge.

Naturally, when you prove the existence of a market and simultaneously fail to meet its needs, you can be sure someone else will do so in your place.

4. Vine’s parent company problems:

One of Twitter’s reasons to acquire Vine at such an early stage was their strategic intention to use Vine to grow Twitter’s own brand and business. This means that Vine as a standalone brand and product wasn’t the top priority of its shareholders.

This is most obvious from the fact that Twitter came out with its own video feature, which pretty much invalidated the need for Vine’s existence. Not surprisingly, Twitter executives were talking about integrating all of Twitter’s video solutions.

Why was Instagram successful under Facebook, while Vine failed under Twitter? I suspect the fact that Instagram was acquired at a later stage of the life of the business plays an important role. Keep in mind Facebook has had trouble popularizing consumer-facing apps that it was.

5. Vine’s executive churn, lack of direction, and leadership problems:

It’s an absolute certainty that Vine’s troubles with Twitter created a lot of problems for the business in subtle ways, less visible to outsiders. Whatever those problems were, however, it’s a fact that Vine had trouble keeping its key executives. Two of the founders left in 2014 (theoretically Vine’s best year!), and the third was laid-off later on, which at least hints at a conflict with the higher-ups in Twitter.

“Vine didn’t ship anything of consequence for a year.” - Ankur Thakkar, in an interview for The Verge

When there is trouble at the top, the problems inevitably trickle down to the whole team. It’s difficult to have good leadership and a strong sense of direction and purpose in such circumstances.

Vine vs TikTok

When discussing Vine’s failure, it’s important to bring TikTok into the conversation because of two very obvious reasons:

  1. TikTok and Vine share a very similar concept.
  2. Vine failed, while TikTok is arguably the current hottest app in the world. TikTok has more downloads on the AppStore than YouTube, Instagram, Facebook, Snapchat, etc.

Making things even more interesting, Vine was the first mover on the market and was out-competed nonetheless. TikTok entered the market when the competition was much, much fiercer – short video solutions are abundant on all big platforms. Yet, it’s extremely successful.

So how did this happen?

Vine vs TikTok

Entertainment Media Platform vs Social Media Platform:

Despite a similar short video format, unlike Vine, TikTok understands that it’s not in direct competition with Instagram. (Keep in mind Facebook was creating their own copycat app, Lasso, in an attempt to compete with TikTok. This wouldn’t make sense if Facebook thought Instagram is their TikTok competitor.)

TikTok’s short videos are different from stories. Their goal is to entertain the public, rather than to share a moment with friends.

Because of this, TikTok (and Vine) content creators are closer to YouTube channel owners. They are professional entertainers, looking to spend most of their day creating video content, and getting paid for it.

So, despite the plethora of social platforms with short video features, Vine’s demise left a hole in the performative short-video entertainment market, and TikTok jumped in it extremely successfully.

And unlike Vine, TikTok is doing a good job addressing market needs. Videos of different lengths, remix feature, live stream feature, etc. They are also pushing monetization features for both the content creators (e.g. donations during live streams) and the platform (e.g. TikTok’s ads solution).

TikTok’s Importance:                                

TikTok is the first example of a Chinese consumer app spreading all-over the western world. The app is owned by a tech giant with deep pockets based in Beijing called ByteDance.

When Vine faced problems, their parent Twitter was quick to abandon the project – it wasn’t the company’s core business, and bearing losses in desperate attempts to revive it made no sense, especially keeping in mind Twitter doesn’t have as much cash as the other tech giants.

ByteDance would probably fight to survive much harder if their app faces difficulties. This is made even more likely keeping in mind that in China business and government interests are rarely separate. TikTok’s worldwide reach likely gives it strategic importance, which means that even if the app is unprofitable, it’s extremely unlikely it’ll get scrapped.

Unlike Vine, TikTok is probably here to stay.

What’s happening with the Top Viners?

As mentioned, the stars that became popular on Vine started jumping ship before the platform was shut down. In fact, it’s their gradual move to competitor platforms that was a major reason for Vine’s final shutdown.

So, almost all popular Viners like King Bach, Nash Grier, Lele Pons, Brittany Furlan, Rudy Mancuso, Josh Peck, Jerry Purpdrank, Logan Paul, Cameron Dallas, and Alx James are professional influencers with a presence on multiple platforms – Instagram, Twitter, YouTube, and unsurprisingly – TikTok. In the long run, building an audience on Vine did pay dividends, even though Vine’s monetization options were not that great.

In that sense, despite Vine’s failure, it was the beginning of a short entertainment video revolution.

--

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This is Brought to You by:
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NerdPilots

Get fast, reliable web, mobile and software development help 24/7.

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Acadium

120 hours of digital marketing from a remote apprentice for only $299 (+ $50 off!).

This could be your AD. Sponsor Startup Cemetery to reach +10,000 entrepreneurs.

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