Generation Z is obsessed with this $20-a-year Instagram alternative because it doesn't have any ads

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Photo-editing app VSCO has surpassed one million paid users.
It's one of the fastest-growing subscription-based businesses in the world, in spite of fierce competition from lots of free apps and Instagram.
The CEO of VSCO says Generation Z is driving the app's explosive growth.

Every day more than 95 million photos are shared to Instagram. It's a juggernaut in the field of social networks, with more than 800 million monthly active users.

So it's noteworthy that an Instagram alternative called VSCO has surpassed one million paid users for VSCO X, its subscription service launched in early 2017.

The app's rapid trajectory makes it one of the fastest growing subscription-based businesses in the world, and has helped grow VSCO's revenue 91% year over year in 2017. It's on track to increase revenue 100% this year, according to the company.

A subscription to VSCO X, which unlocks exclusive photo-editing tools and tutorials, costs $19.99 a year. That might not sound like much, but consider that there are dozens of free apps like it, and Instagram has its own suite of filters and tools that let users play with their photos and share with family and friends without ever having to leave the app.

As it turns out, it's Generation Z that's helping VSCO X rocket up the charts.

People under the age of 25 make up nearly 75% of all VSCO users, with Generation Z accounting for the largest segment of paid customers on VSCO X, according to the company. The fastest growing group of VSCO users are between the ages of 13 and 17.

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There was a period of time when this surprised founder and CEO Joel Flory, a former wedding photographer who started the company in 2011 with an art-director friend.

"We were building [the product] for ourselves and realized that we no longer were the majority of users on VSCO," Flory told Business Insider at the startup's headquarters in Oakland.

From the beginning, VSCO set itself apart from rival photo apps and social networks by doing away with "vanity metrics," such as likes, comments, and follower counts. There are no ads or leadersboard, but instead, a feed of carefully curated content.

"For us, the only thing we wanted to show with the photo is the person who made it. That's really what we wanted it to be about," Flory said.

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According to Flory, this focus on the creator really resonated with Generation Z. With the launch of a subscription service, VSCO learned that young people were even willing to pay for tools in an app space that let them "be who they are ... try new things," without the pressure and anxiety around building a following and collecting likes.

Born between the mid-1990s and early 2000s, Generation Z is building a reputation as the most socially conscious age group. A recent white paper from MNI Targeted Media Inc., a division of the Meredith Corporation, found that more than half of Generation Z say that knowing a brand has strong values and is "doing their part to make the world a better place" is important to them and directly influences their buying decisions.

"This generation makes sophisticated choices about identity, purpose, and values," researchers at the firm said. "They've spent their lives surrounded by digital content and they know how to filter anything that lacks the right tone, language, and relevancy."

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VSCO is the fifth most popular photo and video app for iPhones in the US, according to app market data company App Annie, behind YouTube, Instagram, Snapchat, and Google Photos, in that order. Its ranking by monthly active users has been rising over the last year, while Instagram's rank remains stable. Flory has largely Generation Z to thank.

The team at VSCO is constantly adding new filters, photo-editing tools, and educational content to the VSCO X platform so that the value of their subscription builds all the time.

"It's really about providing the ultimate experience for that creative," Flory said. "For us, it's not about some other company's way. It's about the VSCO way."

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