App.net lays off employees, open sources Alpha

Despite raising enough money to cover operational costs, App.net did not have enough customers to pay its employees.
Written by Chris Duckett, Contributor

App.net's radical social network experiment of charging users money to use its services has plateaued, as the company found it did not have enough subscription renewals to pay for its development team, and subsequently took the decision to have no more salaried employees.

Writing in a blog post, App.net co-founders Dalton Caldwell and Bryan Berg, said that users shouldn't notice any change to the way the service operates.

"The good news is that the renewal rate was high enough for App.net to be profitable and self-sustaining on a forward basis," the blog post said. "Operational and hosting costs are sufficiently covered by revenue for us to feel confident in the continued viability of the service."

"After carefully considering a few different options, we are making the difficult decision to no longer employ any salaried employees, including founders. Dalton and Bryan will continue to be responsible for the operation of App.net, but no longer as employees."

App.net will retain contractors to look after support and operational needs, as well as contracting development for "specific new development projects".

In concert with this decision, the company will end its developer incentive program, but is open sourcing its Alpha microblogging platform.

The founders said that depending on future revenue, an increase in subscriptions could see the possibility of addition development resources.

"In any event, our intention is to have the App.net service continue to operate for as long as there are customers willing to support it," they said.

Caldwell and Berg said that the market conditions that lead to the creation of App.net continued to exist two years after its founding, and they saw more need for such a service today.

"We continue to believe in the usefulness of a sustainable social platform where users and developers are customers, and not the product being sold to advertisers," they said.

Although it began as an exclusively paid service, App.net switched in February last year to a freemium model.

"We have been spending the past few months learning and analysing data in order to come up with a plan for a sustainable and beneficial free tier," Caldwell said at the time.

App.net began as a Kickstarter-style 30-day fundraising campaign with a target of US$500,000. The target was exceeded as App.net raised US$803,000 from more than 12,000 backers.

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