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Catwang and the Rise Of The Digital Sticker Economy

May 27 2014, 8:06am CDT | by , in News | Latest Business News

Catwang and the Rise Of The Digital Sticker Economy
 
 

Franky Aguilar was tired of drawing family-friendly cartoons. The young designer was pulling down $90,000 a year at gaming giant Zynga when, in early 2012, he started hanging out at a Starbucks in Walnut Creek, Calif. with his cracked MacBook and a $100 Wacom tablet. He began scribbling fire-spewing cat heads and flying squadrons of fuchsia donuts, odder visions that harkened back to his high school graffiti days.

Aguilar, who had taught himself programing, cobbled his drawings into a photo editing app called Catwang and released it for free in April 2012. A month later the app had more than 130,000 downloads by people pasting his cartoons on photos they would share on Instagram. Aguilar’s crucial next move: giving his doodles a 99-cent price tag. Within two months the app was bringing in $400 a day.

In two years Catwang alone has sold $250,000 worth of stickers. “It was more money than I’d ever seen in my life,” says Aguilar, who quit the Zynga job a few months after Catwang hit the market.

Soon after, Aguilar and street-apparel maker Upper Playground sold rapper Snoop Dogg on an app called Snoopify, which offers $1.99 packs of cartoon pimp hats and dreadlocks. On a whim Aguilar designed a $99.99 cartoon marijuana joint called the Golden Jay. Incredibly, 1,000 people have since bought it to garnish their Instagram selfies.

This desire to spend $100 on a digital spliff is the same basic human craving Aguilar saw at Zynga, which has a thriving virtual goods business in tricked-out FarmVille tractors. At Zynga they called it “invest and express.” Stickers and smaller emoji symbols are one way to cope with the never-ending teen angst over their “likes” tally, and are accelerating a broader social trend away from communicating with text.

Bertrand Schmitt, the 37-year-old founder of app analytics firm App Annie, says that when his Beijing staff text each other after hours on WeChat “there will be seven or eight messages without anyone having said anything [with words]. null  Even struggling BlackBerry has benefited from the trend – its BBM messenger recently moved up the app store rankings in South Africa and Indonesia after it debuted a sticker store.

A crowd of artists, brokers and publishers are building a market for digital stickers that may be way bigger than the one for the tiny emojis that now dress up chats and Instagram. There are already 600 sticker apps in the iTunes and Play stores, but most of the action is on messaging apps like LINE, backed by South Korean search giant Naver.

LINE has 420 million registered users worldwide, who send 1.8 billion stickers each day picked from a vault of 10,000 that LINE produces in house. It designs some in collaboration with media giants like Disney or Hello Kitty, while a few of LINE’s own creations, like the troubled bear-and-rabbit romance of Brown and Cony, have become so popular that they’ve spun off into books and TV shows.

One big problem here: most people would never dream of paying for a cartoon bear or fire-breathing cat.

“I don’t look at the stickers you have to pay for,” admits Jamie Park, a 38-year-old Korean-American teacher in the Bay Area, Calif. who sends free thumbs-up stickers to her friends and family on KakaoTalk. Her younger friends in the local Korean-American community use Kakao far more — “every hour” — but only go for the free stickers.

Facebook doesn’t even bother charging–its Lego-and Minion-branded stickers are all gratis. And free stickers are “100 times more popular” on Kik, a messaging app that’s popular with teens in the U.S., according to its CEO Ted Livingston. “Our users like stickers,” he says. “That’s definitely not the debate.”

Over in Asia, though, LINE does a brisk business. It sold nearly $70 million worth of digital stickers in 2013, or 20% of its $338 million in total revenue last year, helping it recently become the top app publisher by monthly revenue outside of games.

Stickers could rake in another $140 million for LINE this year, we estimate. That’s enough cash flow, says sticker broker Evan Wray, to make a $2 billion global market by the end of this year, as the trend migrates westward and users of messaging apps like LINE and WeChat double to 2 billion by the end of 2014, according to Wray’s estimates.

The bullish (perhaps wildly optimistic) estimate assumes stickers will be that rare Asian pop culture phenomenon that breaks through the translation barrier in the West.

It may be. Hazuki Yamada, a representative for LINE in Tokyo, says that ”European and American [sticker] buyers are increasing.” Jeanie Han, LINE’s U.S. chief, has also seen it happening in Spain, where more than 10 million people have reportedly downloaded the messaging service. Han was setting up sticker-creature content deals in Spain before she even moved to America. The Spanish, she says, are fast at adopting new technology. (It’s also a cheap thrill in an emotionally expressive country with 54% youth unemployment.)

South Korean messaging app KakaoTalk got a single-digit proportion of its $200 million in 2013 revenue from digital stickers. That percentage would be higher, says KakaoTalk’s CEO, Sirgoo Lee, if payment for stickers was easier on Android, on which Google Wallet and carrier billing still trail Apple with its 800 million iTunes account holders.

Sticker broker Wray, 24, says 75% of his sticker sales happen on iPhones, where it’s easier to make in-app payments. Another challenge: WhatsApp and Instagram, two of Facebook’s biggest mobile services, look unlikely to accommodate stickerlike graphics this year, according to people close to the companies.

To break into the U.S., sticker tycoons are foregoing emotion and targeting America’s obsessions with brands and sports. “The American population already spends vast quantities of money to be walking advertisements,” says American University professor Naomi Baron.

TextPride’s Wray is trying to talk bigger brands off the fence. He’s produced stickers for British soccer clubs like Tottenham Hotspur and movies like Kill Bill for Miramax Films, and sells them on to messaging apps, taking a double-digit cut of revenue. He says he has partnerships with half a dozen recognizable media and messaging names in the pipeline.

For now leave it to the startups and niche brands to pursue Asian-style whimsy. Former rock musician Bobby Schubenski and partner Jim Somers started goth-skater clothing company Blackcraft Cult. In April they started selling a $1.99 Black Craft sticker pack with variations of their trademark, “Lucipurr” the cat, along with skulls, beer glasses and an emoji middle finger. They think stickers could help double last year’s sales of $1.3 million, which were mostly in apparel.

 

null Schubenski says.

Follow me on Twitter: @Parmy

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