
A Fee-Based Twitter Is No More Ideologically Pure Than An Ad-Supported Twitter - dpeck
http://www.techdirt.com/articles/20120813/00081620002/fee-based-twitter-is-no-more-ideologically-pure-than-ad-supported-twitter.shtml
======
eykanal
Following the model from the article:

In the fee-based model, the needs of the following must be met: (1) the
company, (2) the users.

In the ads-based model, the needs of the following must be met: (1) the
company, (2) the advertisers, (3) the users.

By removing the advertisers from the equation, a _lot_ of resources are freed
up to address the needs of the other two parties. It's kind of strange to say
that "the company" is a party being serviced in this manner... they're asking
for cash, and people are giving it to them for a service. Yes, they have needs
that require resources (think administrative assistants, HR, sales, etc), but
these people all exist to help service the user. To that extent, the majority
of the company is now existing to create a better experience for the user.
Their argument is that this is significantly superior to the model where a
significant portion of the company exists to service advertisers, and not
benefit the end user.

~~~
mibbitier
You're assuming that advertisers never meet users needs.

If I'm selling you a bike, and I also tell you about a good deal on bike
insurance you can get, then I'm advertising at you. Maybe I get a cut of the
insurance premium. BUT, I'm also adding value for the customer. It's a
mutually beneficial transaction.

I know it's blasphemy to claim that advertising is sometimes pretty damn
useful around these parts, but the fact is, it is useful for users just as
much as it's useful for companies in search of revenue.

edit: Has no one here ever clicked on a sponsored result in google? If not,
bear in mind you're the exception rather than the rule.

~~~
wpietri
Advertising _can_ add value when it transmits novel information that would be
hard to get some other way. But it usually doesn't.

It's mainly an arms race to distort natural market outcomes. Coca Cola doesn't
spend over a billion dollars a year advertising because they want to make you
aware of some new fact. They just think they can make much more than that
billion back by manipulating you.

~~~
InclinedPlane
Part of that is due to distortions caused by tax regulations. Advertising
spending is basically a tax writeoff so effectively costs nothing.

~~~
wpietri
I'd love to see some evidence for that.

As far as I know, it's just another business expense, which means you deduct
it from your profits. Coca Cola paid about 17% in taxes for 2010 [1], so if
you squint hard enough I guess you could look at it as a 17% subsidy. But
since that's true of any reasonable business expenditure, I don't see it as a
significantly distorting incentive.

[1] [http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-
Co/F...](http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Financial-
Statement/Income-Statement)

------
dasil003
I'm a bit surprised the comments here are so overwhelmingly critical. I think
there's a legitimate point here, which is that the users paying money is not a
silver bullet. It's not as if paid services don't make decisions that end up
screwing users one way or another, not to mention the fact that subscription
fees and ads are not always mutually exclusive (witness cable TV, newspapers,
etc). In fact Twitter toed the line for years, building developer confidence
and providing a solid platform. This is precisely the problem that App.net is
addressing: Twitter appeared to be trustworthy but when push came to shove
they decided to throw the developers under the bus because they had enough
normals that they figured the developers and early adopters weren't necessary
anymore.

The reason App.net is more trustworthy is because its founding principles are
a direct response to this existential threat of advertising dollars subverting
the platform. The paying users part is merely the explanation of how to make
this company work, not the guarantee that they will do no wrong.

~~~
r00fus
My only potential gripe with App.net is that they can't protect their users
after the company is acquired. The Instagram/Sparrow problem combined with
tendancy of almost every company to kowtow to the advertising industry is a
valid concern for me.

~~~
shurane
They should follow an IRC or Jabber model. Anyone can host an IRC/jabber
server. Maybe App.net can make an industrial twitter server to be hosted on
windows, *nix, etc.

But of course, that's not what App.net is going after. That is what I think
would be a lot better. Or maybe an industrial Facebook-ish server, too. Would
be helpful to run in-house in giant organizations, I bet.

------
eridius
Point 1 is complete hogwash. Users don't want to keep their money. Money is
worthless if you don't spend it. Users want to get equivalent or better value
for their money. If App.net wants the user's $50, the user wants to get at
least $50 worth of value from App.net. So yes, their economic incentives are
definitely aligned. If App.net wants to get more than $50 from their users in
the future, then they damn well need to provide more than $50 worth of value
to their users.

And Point 2 is pretty bad as well. Yes, you can't degrade the service so badly
that users leave. But you can still degrade the service to a certain extent.
Since the users aren't paying anything for it, they don't expect much more
than $0 worth of value from the service. So you can end up with a pretty bad
user experience in the name of satisfying your advertisers.

------
lowkey
Fee-based Twitter vs. Ad-Supported Twitter is a false dichotomy. This smells
like a PR stunt.

How about an open-source Twitter-like service that can run on your own server
and federate with others? <http://www.Status.net> has offered this for several
years now and they have done an outstanding job of creating a free and open
alternative for status-feed based communication.

~~~
vannevar
Twitter's functionality is basically email+listserv. I've often wondered why
the big email players (Google in particular) didn't field a competing service
simply built on top of email. You could still use your email account as usual,
but using a special client you could use the same account as a Twitter clone.

~~~
mbreese
Wasn't that Google Buzz?

------
guelo
The key to a company providing good service is competition.

Look at Comcast, one of the most hated consumer companies, it charges for
service but its interests are not aligned with its customers because it
operates regional monopolies so their interest is in extracting as much money
for as little service as possible from the locked-in users.

Compare with Apple, it operates in the highly competitive consumer electronics
industry and that helps make it a world leader in customer satisfaction.

Now look at American mobile phone service operators. There exists a decently
competitive market with 4 main companies, but the standard 2-year contract
lock-in means all the competition happens mostly at customer acquisition where
you see big deals on discount phones. But after the customer is locked-in they
operate more like monopolies with hidden charges and poor service.

As for social networks, the network-effect lock-in is a huge impediment to
good market competition. Once someone has their social network in place it
makes it very difficult to switch. So I would think the incentives are more
similar to the mobile phone market, pro-consumer at acquisition and then not
so much afterwards.

------
jerf
This is such muddled thinking there isn't much there there. You can't just
drop a word like "ideological" into a debate as if there is one uniform
definition. As near as I can tell, the only way to be ideologically pure for
Mike Masnick would be for no money at all to be involved, but once you spell
that out, it becomes obvious that this is hardly an uncontroversial definition
on its own. It also means that "ideologically pure" is pretty much impossible
by definition at any scale. I for one tend not to worry too much about the
fact that someone has not reached a standard that was impossible to reach in
the first place.

If I am wrong about what it would take to be ideologically pure according to
Mike Masnick, well, chalk it up to the fact he never saw fit to spell it out.

I could pick further, but it's so mushy there's hardly any point.

------
samstave
The service should be pay to publish, free to consume.

You should let people follow anything they want for free, but if they want to
turn on the ability to publish content into the service, then they pay

~~~
JosephRedfern
But doesn't that get rid of the social aspect of "Social Media"? People like
being able to comment on things - but why should they have to pay to do so?
Just because someone isn't willing to pay doesn't mean that what they've got
to say isn't worthwhile, and vice versa. I think a pay-to-post/free to consume
setup would result in a spammy, advert ridden service, that would quickly die.

~~~
wmf
I thought all conversation between people moved to Facebook and Twitter is
basically used to pimp stuff and beg for retweets.

------
ghshephard
The element that techdirt overlooks, and that I think they did their community
(and themselves) a disservice by not mentioning, is the privacy element.

Because selling your personal details is a (relatively) invisible intrusion
(unless the provider really screws up, ala Beacon) - there is a significant
cost to the user (that cares about privacy) that is not visible to them.
App.net is aligned only with the users from that position. There is _no_
incentive for them to resell their user's private information.

With regards to advertising - clearly that has to do with your pain points
regarding advertising. We've heard lots of feedback from people who say they
don't mind the advertising on Facebook, or twitter. These people also might
even watch commercial television.

For those of us who stopped watching commercial television a decade ago
(before "cutting the cable" was in vogue), who run ad-block religously, and
are offended by "kmart specials" appearing in our twitter stream - we clearly
have already reached our pain point, and are looking for something new.

For those people - App.net will be a consistent, long term, ad free,
communications infrastructure.

There may only be 10,000 or so people there, and the other 5million (50
million? 500 million?) people may be on twitter. But, unlike Facebook, where
it's important that all of your high-school friends, ex-girlfriends, aunts,
nieces, classmates, and party-goer-chums are on the same site - I'm quite
happy to leave them all behind and follow a small core of interesting
technical people without distraction.

~~~
badclient
Have app.net people clarified if _they_ would be okay if the service only had
10,000 users at its stabilization point?

I know you'd be okay with it but so far, we don't have much from them stating
the same. The default of course is that a service that peeks at 10,000 users
is headed to dead pool. This is a bit different with 10K paid users but that
is still not much in terms of providing financial security to the company to
not require funding or other creative ways to monetize.

So my question is simple to app.net folks: if two years from now your service
has 10,000 paid subscribers AND you know that that is the peak, will you be
content running the company?

~~~
aggronn
> if two years from now your service has 10,000 paid subscribers AND you know
> that that is the peak, will you be content running the company?

This is entirely dependent on opportunity cost--ie, whats their take-home pay,
and whats the real commitment?

~~~
briandear
I'd they are just in it for the ideology, then I fully expect then to run the
company as a non profit. Oh, they aren't are they? They want to make money
too? And they're trying to convince people that they're in it for openness and
all that? If they made App.net into a Wikipedia style foundation, I would have
gladly jumped on board. But instead they're just trying to create an angle to
justify a twitter clone. I can build my own twitter clone. I don't need to pay
App.net for that. I have yet to see anything original about this idea. They're
just trying to profit on a rather limited crowd of tech people. If it was such
a great idea, then the VCs would be throwing money at them. And no, they
didn't turn it down-- it isn't there because their business model won't scale.
There's only a limited amount of social network inbreeding that can happen
before a niche paid network runs out of cousins.

------
ceslami
I take issue with the author's point that:

"A free-based service, supported by advertisers, has tons of incentive to keep
its users just as happy as a fee-based service. Why? Because if it doesn't,
people go elsewhere and the advertisers go with them."

For the average consumer internet site, happy users does not equate to happy
advertisers. As Facebook shows, you can have "happy" users -- in that they
don't leave -- but create a dismal product for advertisers. They cannot
optimize for advertisers without compromising the user experience. App.net
will never need to optimize for advertisers, so they can focus completely on
the user experience, or platform experience.

Edit: Removed quote from code block. PG - Markdown parser?

~~~
vannevar
Yes, the goal of a UX designer in an advertising-supported context is to
create a tolerable experience for the user while delivering maximum exposure
for the advertiser, whereas a UX designer for a fee-based service is focused
on delivering a great experience for the user, period.

------
nuttendorfer
I dislike ads so much I would stop using your service if it wasn't possible to
block them. I would much rather pay for all the ad-supported (well, not by me)
service I use.

Everybody should be looking for ad-free ways to support their services.

If you are not paying for something the provider has incentive to sell your
data, not so much if you paid for it. Example: I'm currently on a free Dropbox
account simply because I don't need much storage. I would love to pay for the
option to have my files encrypted. This would mean that Dropbox can't save
space, thus it's alright I should pay for that.

------
chill1
"First off, App.net's interests are not economically aligned with its users.
It wants money from those users, and all things being equal, those users want
to keep their money. So their goals are actually diametrically opposed."

After I read that, I didn't need to read anymore.. I, and I presume many
others, are perfectly alright with the idea of giving money to a company that
is providing a worthy product or service in return. I understand that it costs
money to make a good product or to provide quality services of any kind.

~~~
dasil003
Yes. He's essentially affirming the conclusion that users only want free
services.

Of course more users want free services, but that doesn't mean that _some_
users don't want a premium service, and more importantly, that those users
don't add a disproportionate amount of the network effect value to a
microblogging service.

------
laconian
I don't know why this is so hard or requires such significant investment up
front. How is making a decentralized Twitter service more of a challenge than,
say, IRC or Jabber? I know that the problems aren't exactly the same, but I
would hazard to guess that they are on the same order of magnitude in terms of
implementation difficulty.

~~~
thezilch
So they have a runway before their maximum 10K paying users is only enough to
keep a part-time operations team and servers up.</sarcasm>

I have to agree with you though. This may be more than <insert weekend
project> we always hear about, but not _much_ more. I'd imagined the product
would be mostly built already.

Maybe they wanted an injection of cash before getting a handful of servers,
and we should see everything up and running within the week.

Maybe they think they need to be Twitter-sized day one, which would be a
mistake on their judgement.

------
chimi
Why don't people who donated to app.net at least get an account to use the
service? They paid $50 and they don't even get an account? In a way, by paying
$50 or more, they are committing themselves to pay an unknown, perhaps greater
amount to actually _use_ app.net.

$50 is a lot of money. Why don't funders get an account?

~~~
wmf
As the site says, the $50 is pre-paying for an account.

~~~
chimi
Am I reading it incorrectly? It says, "You'll be committing to prepaying for a
full year of 'member-level' service."

That doesn't sound like, "You get a year of service."

~~~
tlogan
Are you sure? Can somebody confirm this?

~~~
bobbles
You pay $50. Email them asking for alpha access. They give you the account.

$100+ accounts are for developers & access to APIs.

------
tvladeck
This article is hogwash.

(1) No. In fact, this _does_ make the user the customer, as opposed to free
models that make the user the product. If the user is the customer it does
impose somewhat of a guarantee that product development will be oriented
around the user.

(2) Also no. Everyone by now knows that the value of a network increases very
rapidly as a function of its users. Or, put another way, switching costs go
way up. Knowing this, it doesn't take a PhD in Game Theory to realize that one
potential strategy for a network like Twitter to stay free and attempt to
achieve "lock in" (very high switching costs), and then impose tangential
costs on the user (shitty advertising) that are less than the switching costs.

------
jfb
This is a nonsensical article. Ideology doesn't enter into it; say rather, a
firm that sells directly to the user is open to market pressure from those
users in a way that a firm that sells their users to a third party simply
isn't.

~~~
grippi
Agreed. Instilling a price tag for users legitimizes its utility (to a certain
degree).

However, what bothers me most about this article is that it's so black-and-
white, alluding to the existence of only two pricing models out there: Ads or
money up-front. No where does this article mention the possibility for a VRM-
based (<http://cyber.law.harvard.edu/projectvrm/Main_Page>) revenue model,
attribution-licensing model, etc.

[sad panda]

------
kcodey
Think of it like FM radio. It's free for us to listen but we have to sit
through advertisements. XM and sirius said hey, let's have people pay to
listen, so don't have to make them sit through ads. Basically just a different
biz model. That model can work though because you don't necessarily need
critical mass to have people consume your content. (Yes to a certain extent
you do) But the critical mass needed for the next twitter like platform would
require a huge critical mass for people to continue to pay for the service.
Just my stupid opinion

~~~
onedev
But they're also SATELLITE radio. That is a huge value add over traditional
radio service. I don't think users were only paying for sirius/XM because the
services didn't have ads. It was because the products were technically
superior.

~~~
kcodey
What is the huge value added over traditional radio? That it's not FM? In
terms of quality you mean? I thought when it first came out that their big
pitch was no ads. But don't get me wrong, I also think satellite radio is
better because of programming, sound quality, AND no ads.

Although I think they are running ads in some markets... Guess they couldn't
survive on the no ads model and are going hybrid?

------
nivertech
Ads-based TV (networks) → fee-based TV (cable) → cord cutters

Ads-based twitter → fee-based app.net → social cord cutters

------
illinx
"It wants money from those users, and all things being equal, those users want
to keep their money. So their goals are actually diametrically opposed."

By this standard, aren't the goals of every party in a transaction where money
changes hands "diametrically opposed?"

------
aniro
"Ideologically Pure"? Link-bait much?

Apparently the author finds the notion of a fair-value exchange impossible to
understand.

"First off, App.net's interests are not economically aligned with its users.
It wants money from those users, and all things being equal, those users want
to keep their money. So their goals are actually diametrically opposed."

I would bother with an introduction to the fundamentals of how economic
exchange work.. but I honestly believe this was written with so much foaming
froth on the lips of the author that he cannot possibly see sense enough to
understand reason.

I hope he got the jacked up page view count he was hoping for.

------
lloeki
_> those users want to keep their money._

Well, no. Those users want a service. Nobody coerces anyone into giving
App.Net money, so those paying users actually _don't_ want to keep this amount
of money, in exchange for the service.

 _> A free-based service, supported by advertisers, has tons of incentive to
keep its users just as happy as a fee-based service._

But for that it has to show ads, and the business is then to show ads in the
most efficient way possible, which has a number of consequences we can readily
witness today.

------
ninetax
It's all about profit. That is, when the transactions are all said and done
(whether the user paid for the service, or the advertisers have bought their
advertisements) how much good will is left over?

How much good feeling does each party how? Can the user say that they feel
good about using the service, is the service provider satisfied with how the
transactions lay?

With Facebook and twitter some people, users and advertisers alike, don't feel
enough profit from the service. Maybe with App.net they will.

------
bcbrown
They miss the point when they write "Who's to say that App.net will always
cost $50 per year? What if, a year from now, it needs a lot more to keep the
service going. App.net has incentives to figure out ways to raise the price to
bring in more money."

If it turns out that the price charged is insufficient to maintain the
service, I'd expect them to raise the price. The alternative is for the
service to not exist, taking as an axiom an ad-free service.

------
notlisted
Money talks. Don't bite the hand that feeds ya. If users pay and there are no
advertisers, the users are investors. If advertisers pay (or pay a heck of a
lot more than the user) they're the investors.

Look at HBO, because they're not beholden to some lowest common denominator
PC/right-wing/hypocrite relifreak agenda they produce awesome content. It's
not a coincidence.

------
SCdF
I think if anything the best thing about having a paid system is that you have
one less person to make happy. Unless your ads are just a dropin (e.g. google
ads) you have to have a marketing and sales team, and presumably a bunch of
coding work has to go into making a backend for advertisers to upload their
ads and decide who sees what and so on.

------
j45
Nothing is ever free. Either we are buying a product, or we are the product.

In the real world, things cost money for businesses to stay open and
sustainable.

I'll say it again, in a free system, we are the product that's sold to
advertisers.

If I had to pick one, I'd like to be able to pay for such an experience. It's
preference and I look forward to seeing how it goes.

~~~
thinkingisfun
Oh, but there's several shades of grey. Take running friendica or diaspora on
your own webspace, for example. You're a customer to your webhost, but the
software is free. Well, it does have the cost of being kinda slow or hard to
set up respectively, but still.. there are public pods you can use and donate
to, and where the product is mostly the warm fuzzy feeling people get from
doing the right thing. I think you are underestimating human generosity and
inventiveness.. shop around!

~~~
j45
My definition of a customer is someone who pays me.

Someone using a free service is a user, they may not necessarily pay.

Didn't mean to come across as underestimating human generosity, I very much
believe in keeping kindness, goodness and giving fashionable, but in money,
the context of a business, is largely it's bloodflow.

------
anuraj
One more model is pending - a donation based twitter - twitpedia

------
marshallp
The point no one asks is - why has a federated model such as rss been replaced
with a single point of failure monopoly - twitter.

