A Fee-Based Twitter Is No More Ideologically Pure Than An Ad-Supported Twitter
from the drop-the-crap dept
A few weeks ago, we posted a bit about Dalton Caldwell’s argument that a fee-based Twitter made more sense for users, because the company wouldn’t put advertisers first. Caldwell, of course, has now put his development skills where his mouth was and recently launched App.net, which kicked off with a Kickstarter-style funding campaign in which it sought $500,000, mainly from users who would pay $50/year for the service. Developers could pay $100 and there was a “pro” tier for $1,000. Over the weekend, the fundraising effort hit the target mark and it has since shot well past the amount.
First of all, I think it’s great that we’re seeing alternatives and someone like Caldwell trying to do something different. More competition is something I always think is a good thing, and I’m happy to see more players in the market trying different ways to do something. If anything, hopefully it will drive Twitter to stay more focused on providing a great service.
But I do have a complaint: Caldwell and others seem to be acting as if this fee-based effort is somehow more ideologically “pure” than a free-based system that makes money on ads. You can see it all over the website and especially in the video announcing the launch:
That’s hogwash.
Two points:
- 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. 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. Now, that’s fine. That’s how businesses work. But to suggest that the economic interests are aligned is simply not true. Coldwell argues that the interests are aligned because it now has to make the service as good as can be so that users will want to pay. But the same thing applies to free-based services, as we explain in the next point…
- 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. If the advertisements are too annoying and/or intrusive, people will go away and the value of that advertising drops. Any smart media property knows this, and actually works quite hard on keeping the user experience as good as possible, which quite frequently means pushing back against the desires of advertisers. Caldwell acts as if all such companies immediately give in to any ad company desire, which is either spoken from ignorance or out of a desire to misrepresent reality to benefit his own effort.
Again, none of this is to suggest that either model is “the right” model. But it’s flat out ridiculous to suggest that either one is somehow economically pure or has interests more aligned with users. What amazes me, however, is so many people are repeating Caldwell’s assertions as if it’s absolutely true, when it’s clearly not. App.net may turn out to be a success or it may be a complete flop. I hope it succeeds because I like to see new companies innovate and do new things. But if it succeeds it won’t be because it’s more pure or more aligned with users. It’ll be because it just executes better.
So, please drop the moralizing about App.net being more pure. It’s not. It’s economically interested in taking its users’ money. That’s not that much different than a site that’s economically interested in taking advertisers’ money.
Filed Under: advertising, business models, dalton caldwell, fee, free, ideology
Companies: twitter
Comments on “A Fee-Based Twitter Is No More Ideologically Pure Than An Ad-Supported Twitter”
So…when TV networks moved from free, ad-supported broadcasts to charging for cable subscriptions, did they put the customer first?
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I was thinking about the cell service companies in terms of “things I pay for that put my needs above their own..”
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How long until you will pay AND have ads?
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I hate channels like TNT and Space because of that. Shitloads of advertising. I still have cable because of my family and because I still feel there are channels worth. But they are doing it right in annoying the heck out. Pay to watch ads. Wonderful.
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HBO.
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Cable companies seem like a very different situation because they are government regulated monopolies. That allows they to get away with a considerable amount of ignoring their customers.
Re: Response to: Rikuo on Aug 13th, 2012 @ 9:11am
TV networks do not charge cable subscriptions… If you’ve received a bill from MTV, I’d suggest not paying it.
Re: Re: Response to: Rikuo on Aug 13th, 2012 @ 9:11am
They do too. It costs the cable providers to air their content and we, the public, in turn pay the cable providers for paying the content owners.
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This comparison is a little tricky, since app.net aims to mainly be a neutral provider, almost like a cable company where any conceivable channel can be chosen; in real life, the distributor (Comcast) is a gate-keeper and pays the channel channel (Discovery) a huge amount of money for *content*. With app.net, developers pay a relatively small fee to use the *infrastructure*.
Another key difference is that cable channels still show ads (so it’s not a move), while app.net has committed to none on the core service. Some programs using the infrastructure might, but they won’t have the same power as FB, Twitter, or if it’s successful, App.net.
In the shadow of massive user-bases like Twitter and Facebook, its easy to forget how things work when you first start out. If Twitter had a $50 fee when it first launched, would anyone even know what a ‘tweet’ is today? Probably not. That’s b/c an initial fee is called a ‘barrier to entry’ and typically the smaller the barrier, the more ‘entries’ you will have. Barriers are not always bad and this site is banking on that fact but for something as casual as Twitter, any $$ barrier is a big one. I doubt this site will ever have a user base larger than 1 million unless they introduce more incentives to climb their barrier or significantly shrink the barrier or both.
The thing is when you don’t have to place advertising as a priority it allows you to listen to what the user wants, you don’t have to put as much effort into trying to work ads into the paradigm, and that was what the people Mike is calling out mean by morally superior. The social network doesn’t have to sell out to unknown parties to stay afloat.
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I don’t think you’ve successfully argued your point. First, it assumes they stay private be/c once you have shareholders, you have misaligned interests.
Second, even if they stay private, the investors are going to want their returns, so unless you can tell me that the start-up and revenue model by definition either, ensures that consumer interests come first, or provides a much greater incentive for those interests to come first, I can’t agree with you.
The bottom line, which is Mike’s point: neither model has an obvious or easily shown incentive structure that makes consumer interests take such greater precedence that you could feel confident it would never radically change.
Um, there is no way I’d pay for Twitter. I like Twitter, but the idea of paying for it is just silly.
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I think that the article is correct: neither revenue model is ideologically purer than the other.
However, your comment is an excellent side-track. I, too, would never pay for a service like twitter, but neither would I subject myself to advertising for it.
If it were a free service, however, I might be tempted.
Three Parties are Weaker Than Two
“It’s economically interested in taking its users’ money. That’s not that much different than a site that’s economically interested in taking advertisers’ money.”
With a paid service, there are effectively two parties: the service and the users. With an ad-supported service, there are effectively three parties: the service, the users, and the advertisers. I agree that the relationship between the service and the users does not necessarily depend upon the model… but there’s another party in the ad-sponsored system, and it’s interests may not be aligned with the users.
Say, for example, al Qaeda (or Occupy Wall Street, or the Tea Party) decides to set up an account on the service and uses it as part of its propaganda/publicity campaign. Government officials decry the service’s allowing al Qaeda’s (or Occupy Wall Street’s, or the Tea Party’s) participation. The service defends allowing the account, on the grounds that the service has no right to discontinue arbitrary accounts for arbitrary reasons in the absence of some court order.
Some users will leave the service due over the issue, and that will harm the service and its remaining users. However, the three-party solution is intrinsically weaker, in that advertisers might withdraw from the service, either on their own or due to government pressure. In that case, the service’s interests are aligned with its (remaining) users, but the advertisers’ interests are not aligned with the users. By having advertisers, the ability of the service to keep servicing the users’ interests is degraded in the face of controversy or similar pressures.
Admittedly, it is possible that some situation would arise that would cause more lost revenue from departing users than from departing advertisers, though in that case, the service’s interests are apparently not aligned with enough of its users. However, advertisers, particularly larger ones, are easier to pressure.
Re: Three Parties are Weaker Than Two
Why are you ignoring investors, either public or private?
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I’m not, any more than the original article did. The original article does not address investors; neither did I. The Kickstarter-esque model they are using is getting seed users, not seed investors.
Re: Re: Re: Three Parties are Weaker Than Two
I appreciate the response, but I don’t see how you can validly make an argument comparing the number of parties involved in each scenario when you left out key parties, regardless of what the OA did.
I was actually very interested in the approach you took to the analysis (e.g., clearly comparing interested parties), but I can’t support what you concluded ultimately b/c while I grant that three parties are weaker than two, that’s irrelevant here b/c no model discussed has only two parties.
Re: Re: Re:2 Three Parties are Weaker Than Two
Sorry, I should have clarified, the reason I believe this is that Kickstarter campaigns are nothing more than that, starter campaigns. If we are really going to compare the two approaches, I think we need to compare an ad-supported business that is well beyond the startup stage and a fee-based business that is well beyond the startup stage. I think if we did that the number of influencing parties would be far less clean.
Interesting take on App.net
This author seems to think such a site would encourage “white flight”
I don’t necessarily feel it was App.Net’s intention, but neither was gentrification of Portland.
http://thesocietypages.org/cyborgology/2012/08/09/race-class-app-net-the-beginning-of-white-flight-from-facebook-twitter/
Re: Interesting take on App.net
A “white-flight” I believe (talking in sheer ignorance here) will take the form of class and business – not on race.
People hide behind (intentional or not) avatars, pseudonyms and online personas. (Just look at this site, myself included.) You don’t have a real clue if the person you’re chatting with is black, white, or otherwise, and even gender is unknown.
But you can quickly determine (perceived) class and ideology. Much in the same way that MySpace became a white-trash haven by encouraging the use of the purple blink tag and music, Facebook became the everyone’s suburbia with more control and homogenous view on the private world of it’s members.
App.net may be trying to offer a clean experience with the end-user in mind. But this will really be limited to a certain type of user: Read “corporate”. While it keeps the “rift raft” out, it also keeps the growth in check. No free content means limited readers. Limited readers means limited writers. Limited writers means limited content. Limited content is not particularly social.
Google+ Had the clout to pull off a facebook alternative. But there were no users there. No users means an awfully lonely social experience.
And this is why I say it will appeal to the “corporate” user. Think socially motivated PR Newswire. It’s really about blabbing (advertising)… not socializing.
Not wrong...but disingenuous
Now now Mike…
“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.”
Sure, you CAN interpret his position that way…but you would be giving the least charitable interpretation possible (never a nice thing to do).
I think what he meant was that the interest of users is to be seen heard, and to see and hear what they want. If profits are driven by subscription, it is in the best interest of the provider to assure that this is the case. If ads are involved, a new viable (or interest) enters the arena, that of the advertiser.
So yes, in a manner of speaking (and int he manner Caldwell obviously meant it) pay-baed is “purer” than ad-based. You could argue over the definition of the word pure…but that would make you a semantical d-bag…
You’re right on your second point (that ad-based models still require user satisfaction). But again, I agree with Caldwell in that I’m annoyed when I get “sponsored tweets” that don’t interest me in the least. It’s annoying! Is it enough to make me leave Twitter? No. Would I prefer they not be there? Yes!
Mike, I can appreciate your position and I don’t completely disagree with it. However, as usual, you’re way too unequivocal about this (even though you say that no model is “right”).
Again, it’s really bad form to give statements made by people the least favorable interpretation. It’s uncharitable and plain uncool…also it doesn’t advance the discussion much.
Re: Not wrong...but disingenuous
Let me add to this:
Point 2 I think is very weak. Ad based services are often directly against the user, because most spend their time trying to sell out the user as much as possible until they complain loudly about it. See Facebook as an example. Ad based services are attempting to be not quite annoying enough to lose you as a user, but annoying enough to make you see the ads and extract value. In this manner, the desires of the user (service with no cost) is directly opposed to the desires of both the website owner (make a living) and the advertiser (make sales / clicks / transactions / goals).
The only incentives to keep the users happy it to keep them from getting so pissed off that they leave. Otherwise, it’s a free for all, jacking as many ads, as many “paid stories”, and as many other cash flow creating items into the “free” page. It’s a tug of war, and again Facebook’s repeated failures and near failures on this level are a great indication.
With anything other than a rich patron willing to pay to keep a website alive with no advertising and no income, the goals of websites and their users will always clash.
I have to agree with James Plotkin here Mike – you have certain things you don’t like, and you work hard to make them look bad at every turn. That you didn’t haul out the “walled garden” rhetoric on this one actually surprised me.
Re: Re: Not wrong...but disingenuous
Ad based services are often directly against the user, because most spend their time trying to sell out the user as much as possible until they complain loudly about it. See Facebook as an example. Ad based services are attempting to be not quite annoying enough to lose you as a user, but annoying enough to make you see the ads and extract value.
I block the ads from those and keep using them, which is somewhat of a loss to the service provider. You mean to tell me that App.net won’t try to squeeze as much as possible from the subscriptions without reaching the point that the user won’t pay for it? (ie: get annoyed with the price)
I have to agree with James Plotkin here Mike – you have certain things you don’t like, and you work hard to make them look bad at every turn. That you didn’t haul out the “walled garden” rhetoric on this one actually surprised me.
Point missed. He’s just pointing out that the financial puritanism advertised by the paid service is bs. And he even says in the article that he supports new entrants and competition. As do I since Twitter has virtually no competitor that delivers a good reliable service.
And it applies to you: you have certain things (replace people here or Mike Masnick for added lulz) you don’t like, and you work hard to make them look bad at every turn
Re: Re: Re: Not wrong...but disingenuous
“I block the ads from those and keep using them, which is somewhat of a loss to the service provider. You mean to tell me that App.net won’t try to squeeze as much as possible from the subscriptions without reaching the point that the user won’t pay for it? (ie: get annoyed with the price)”
Without knowing their end motivations (ie, is this suppose to be profitable, break even, or a charity), I cannot say. I don’t think that charging for access (compared to piles of ads) is any more negative for the user, and in fact is perhaps a bit more direct and honest. The unknown of raising the price in the future (after the membership period ends) is something the user chooses to deal with or not. The user doesn’t get to truly control the number of ads that are on the site.
As a side note, if everyone blocked all of the ads, we wouldn’t need to have this discussion, because ad supported models would fail.
“He’s just pointing out that the financial puritanism advertised by the paid service is bs. And he even says in the article that he supports new entrants and competition.”
Yet, Mike has come out over and over again against any sort of membership or subscription fees to access content. The old digital information must be free thing. I just think that his objections here are more as a result of his bias against the model in general, rather than anything specific to this site. It’s more of a whipping boy to remind us of his views.
Re: Re: Re:2 Not wrong...but disingenuous
Without knowing their end motivations (ie, is this suppose to be profitable, break even, or a charity), I cannot say. I don’t think that charging for access (compared to piles of ads) is any more negative for the user, and in fact is perhaps a bit more direct and honest. The unknown of raising the price in the future (after the membership period ends) is something the user chooses to deal with or not. The user doesn’t get to truly control the number of ads that are on the site.
Users will pay what they think it’s fair price or move to other paid/free services. You don’t price your stuff, market does. Again I think of Google. I may completely block their ads but I don’t because they don’t annoy me. I’m talking about me so maybe I’m a lone example out there and maybe there’s no way other advertisers can do it right like Google and don’t be invasive.
As a side note, if everyone blocked all of the ads, we wouldn’t need to have this discussion, because ad supported models would fail.
As I said, I don’t block if they are not annoyances.
Yet, Mike has come out over and over again against any sort of membership or subscription fees to access content.
He doesn’t, he has written positive articles about Netflix and other subscription based services before. His point actually goes further than that, he often says that content producers have to shift their way of treating the infinite digital goods and offering stuff that add value to the free music/movies: a convenient, fast way of getting the content (Netflix, Spotify), monetize on real scarcities (a big comfy cinema session or a live performance) and others.
What was your point again?
Re: Not wrong...but disingenuous
So yes, in a manner of speaking (and int he manner Caldwell obviously meant it) pay-baed is “purer” than ad-based.
No, it’s just a different approach. And the wrong one in my view as you can see in my comment below.
But again, I agree with Caldwell in that I’m annoyed when I get “sponsored tweets” that don’t interest me in the least. It’s annoying! Is it enough to make me leave Twitter? No. Would I prefer they not be there? Yes!
Would I pay for it? No. And there’s why I don’t mind having ads. I even whitelist Twitter in Adblock Plus as means to help their revenue.
So uhmmm… What’s your point again?
Re: Re: Not wrong...but disingenuous
My point was that I WOULD pay a reasonable fee (let’s say $1 a month) for a service like Twitter. It has value, I recognize that value and I’m willing to pay a modest amount to take advantage of it.
As for your response to my first quote, you haven’t actually said anything other than that in your personal opinion, the pay model is wrong. Fact is, you’re simply perpetuating the “Internet entitlement” viewpoint which I find is often (though not always) unjustified
So….What’s you’re point again?
Re: Re: Re: Not wrong...but disingenuous
My point was that I WOULD pay a reasonable fee (let’s say $1 a month) for a service like Twitter.
Let’s recap the pronouns? Good for you that YOU would pay for it. I wouldn’t. Some others might also pay, and another bunch might not. And I will concede that I might be seeing my country’s reality. Here this service would be doomed or restricted to a niche 😉
As for your response to my first quote, you haven’t actually said anything other than that in your personal opinion, the pay model is wrong. Fact is, you’re simply perpetuating the “Internet entitlement” viewpoint which I find is often (though not always) unjustified
Pot, meet kettle. It’s not entitlement, it’s reality. It’s pretty much like the MAFIAA think they are entitled to any and all the money. Again, pot meet kettle.
Re: Re: Re: Not wrong...but disingenuous
Oh and read Brent up there, I fully agree with him. Quote:
In the shadow of massive user-bases like Twitter and Facebook, its easy to forget how things work when you first start out. If Twitter had a $50 fee when it first launched, would anyone even know what a ‘tweet’ is today? Probably not. That’s b/c an initial fee is called a ‘barrier to entry’ and typically the smaller the barrier, the more ‘entries’ you will have. Barriers are not always bad and this site is banking on that fact but for something as casual as Twitter, any $$ barrier is a big one. I doubt this site will ever have a user base larger than 1 million unless they introduce more incentives to climb their barrier or significantly shrink the barrier or both.
It’s not going to have as much reach as Twitter. Seriously, do you really think ppl in a country undergoing civil unrest will be able to PAY for the service? Just look how many protests were Twitter based, how much the information flows through it on the Occupy movements, the Israeli abuses in Palestine, Spain, Egypt. Are we really that naive to think making it paid would work out?
Sorry Mike but this is one example that is bound to fail, it might appeal to a niche or a portion of the population but it’s not going to have the reach of Twitter exactly because it’s paid.
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$1 a month? who can’t afford $1 a month?
These sites obviously do business based on volume. The subscription doesn’t have to be that expensive.
I don’t think it’s fair to say that a $1/month subscription fee would limit the appeal of Twitter to a niche portion of the population.
I just don’t think people, even cheap and broke people are quite as cheap and broke as you make them out to be.
There’s also the idea of making the services fee based for affluent countries and free in developing countries. That way the poorest of the poor (who live int he poorest places) won’t have to pay but those who can afford it (on balance) will. Are you now going to propose that even poorer North Americans can’t afford $1 a day? That’s a little tough to defend…
BTW- It only detracts from your substantive point when you get political in one of these posts. Your thoughts on Spain and the Middle East aren’t relevant and so while they’re just an illustration, they detract from, rather than bolster your point. Just friendly advice.
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$1 a month? who can’t afford $1 a month?
Pretty much any1 in a convoluted environment. They may have the money and be deprived of means to pay for instance.
I don’t think it’s fair to say that a $1/month subscription fee would limit the appeal of Twitter to a niche portion of the population.
Maybe a niche is indeed too small to describe but it loses reach. As I said, $1 may seem a tiny amount for you but it may not depending on who you are talking about. Maybe Justin Bieber Fans might pay to keep in touch with their stars and so on but merely to get in touch with friends? Sorry, there are better, free alternatives.
Let us think Brazil for instance. Make it paid and they will lose the vast majority of Brazilian users. Much like if Facebook starts to be paid. A good portion wouldn’t be able to pay in dollar but even if they could they wouldn’t care. But they don’t mind seeing the ads.
I just don’t think people, even cheap and broke people are quite as cheap and broke as you make them out to be.
And yes there are those who can’t spare a dime, I have friends that won’t spend $3 on an extra portion of fries because they can’t. Maybe this is not the case in America or in the developed world where no1 ever uses the neighbor’s open wi-fi because they don’t have the money. Hint: I have relatives in the US and my cousin who is currently a student does that.
There’s also the idea of making the services fee based for affluent countries and free in developing countries. That way the poorest of the poor (who live int he poorest places) won’t have to pay but those who can afford it (on balance) will. Are you now going to propose that even poorer North Americans can’t afford $1 a day? That’s a little tough to defend…
Get out of your bubble. And I don’t find it quite fair to offer free for a group and not for another but it could be a business model yes. But then again, why not offer everything for free with a decent advertisement set up that’s not invasive? Google does it right.
Your thoughts on Spain and the Middle East aren’t relevant and so while they’re just an illustration, they detract from, rather than bolster your point.
So you mean that the fact that there are manifestations, political, social or whatever, that use twitter (reddit, Facebook, Blogger…) as a platform is not a relevant argument that keeping them free increase their reach. Interesting. I’ll ignore your friendly advice 😉
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Working backwards from the bottom:
– It was more the “Israeli abuses in Palestine” comment that motivated my retort. You don’t do yourself any favors in the context of this discussion by surreptitiously sneaking in your political convictions.
– Why is it unfair to offer free to some and pay to others? You didn’t really back this up. I agree that charging those who can’t afford it the same fee as those who can is regressive and undesirable. But while “formal equality” is not served by my proposed model, “Real equality” is. If it’s no skin off your back to spend $1 (or so) a month to subsidize those who can’t afford it, why shouldn’t you. If Twitter is a social benefit for everyone, then we can justify a little bit of expense levied on those who can easily afford it. I don’t think I’m in a bubble…a lot of things work this way…like oh say…income tax (spare me the republican vs. democrat debate on this…just making a point)
– ” Maybe this is not the case in America or in the developed world where no1 ever uses the neighbor’s open wi-fi because they don’t have the money.”
I specifically addressed this by saying that only those in developed countries would have to pay.
– “Let us think Brazil for instance…”
You’re still not really arguing with me. Maybe Brazilians should be among those who don’t have to pay…yet.
– Depending on what you mean by convoluted environment, this had been addressed too. My pay model would not force an Egyptian or Tunisian in the middle of a revolt to pay for the service regardless of their means…
I hope I’ve addressed all your counter arguments. Bottom line is that you don’t like the pay model. Quite frankly, I’m not sure I love it either. I’m just saying that it can definitely work and that those who can afford it should be willing to pay for something of value. Again…Where does this unjustified sense of entitlement come from?
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– It was more the “Israeli abuses in Palestine” comment that motivated my retort. You don’t do yourself any favors in the context of this discussion by surreptitiously sneaking in your political convictions.
Dude, I follow quite a few Palestinian activists on Twitter and their blogs when they have those. I’m not sneaking my political convictions, Twitter is used to convey such things along with tumblr and many other services (oh imagine if they all decide to charge $1?). And at the same time I followed the young Israeli protesting against real estate speculation. So now what? I’m putting in my anty real estate convictions? Stop tad pacing around the point.
Why is it unfair to offer free to some and pay to others? [clipped]
That’s why I said it may be a valid business model. The “unfair” attribution was my opinion and I personally wouldn’t use such a service. And no, I don’t want to subside any1 specially if there are more efficient ad-based ways to make it free for every1, I’ll donate for a charity if I want that. Taxes are a good example of your point and a bad one when I consider my country. And I partially agree with that approach in the tax field mind you.
You’re still not really arguing with me. Maybe Brazilians should be among those who don’t have to pay…yet.
Sure, as I said, it might be a business model. But it’ll not have enough reach. As I said as soon as you make it paid Brazilians will flee regardless of your morals, opinions or businesses models. Because they don’t see value that worths their money on such service.
Bottom line is that you don’t like the pay model.
Wrong, I just don’t think it’ll have nearly the reach Twitter has and because of that reach I can get info from anywhere anytime and participate in things that wouldn’t probably be there if it was paid.
I’m just saying that it can definitely work and that those who can afford it should be willing to pay for something of value.
Yes it can and it can be profitable, even with the reduced reach.
Again…Where does this unjustified sense of entitlement come from?
It’s not a damn sense of entitlement. Free chats, forums, blog hosts are there for AGES now. Free is the default for many services by now. Like e-mails. I will not pay for any mail box but there are those that will for some added value that might exist. Got the point? Which service has more reach, paid e-mail boxes or free e-mail boxes? Free Twitter or paid App.net? Can you understand that both of them can co-exist but they will not have the same appeal and reach?
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wow…
I just wrote a long winded response to this reply but the site bugged and I lost it.
I apologize, but I really don’t feel like writing it again…
In summary:
I think we agree with each other for the most part.
You misunderstood my criticism of the political views thing…let’s just drop it.
We disagree on the entitlement thing although I agree with what you say in your reply. You didn’t really address what I was getting at which is essentially that the only reason why free is more popular than pay when it comes to Twitter is because Twitter always has been free.
Paradigms shift. consumer habits change. E-mail once cost money. They don’t anymore and I think we agree on the reasons why. There is no reason why we think of services like Twitter as inherently free other than the arbitrary decision to launch it that way.
One paradigm I don’t think has entirely shifted is the principle that you get what you pay for. The web does challenge this in many important areas. However, grosso modo, the free service is generally not going to be as good as the one that costs money (just like the one that costs $100 will generally be better than the one that costs $10). I think that this is relatively uncontroversial.
Personally, I’m fond of the two tier model like the one used by LinkedIn. A free user gets the essentials, but a pay user gets the bells and whistles.
Or there’s the Grooveshark take on the same model where the free user gets 90% of the functionality but also has ads where the pay user gets a bit more functionality and has no ads.
In light of the above, perhaps it’s really a hybrid model that works best!
Re: Re: Re:4 Re:
You misunderstood my criticism of the political views thing…let’s just drop it.
Well, then I misunderstood in a very negative way. I really didn’t understand how it is not a good example of how Twitter being free increases its reach, regardless of political views or inclination.
Paradigms shift. consumer habits change. E-mail once cost money. They don’t anymore and I think we agree on the reasons why. There is no reason why we think of services like Twitter as inherently free other than the arbitrary decision to launch it that way.
Indeed.
However, grosso modo, the free service is generally not going to be as good as the one that costs money (just like the one that costs $100 will generally be better than the one that costs $10).
I have my doubts on quite a few areas but I tend to agree with you here for a good portion of services offered today. And in theory anything you pay for you tend to be more strict with your quality standards than a free service (different perceptions) forcing the paid service to offer a better customer experience.
Personally, I’m fond of the two tier model like the one used by LinkedIn. A free user gets the essentials, but a pay user gets the bells and whistles.
Now that makes sense and if Twitter decides to offer some perks for a price it has my full support. Some sort of freemium tier as they call today. Depending on the upgrades offered (removing the ads will not make me pay heh) I might go for the paid option. Grooveshark is one good example too.
I guess we now agree that there’s no right or wrong, pure or not. It’s a question of business model and reach. App.net might not have as much reach as Twitter but it doesn’t mean it’s not going to be profitable.
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Haha!
Well thanks for engaging me in this back and forth. I think we’ve come full circle and without lobing stupid ad hominem insults at one another (essentially why I don’t bother with Boing Boing or Torrent Freak anymore).
Well argued Ninja!
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Kudos for you too. I wish our regular ‘critics’ were capable of a decent discussion. I for one had not thought about the hybrid model LinkedIn uses so I end this discussion with added value.
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Actually I think people are cheaper, even rich people are cheaper than you give them credit for.
Any service on the ‘Net that charges any amount, my instinct is not to say “ah what the hell, I’ll try it”. My instinct is to say “Hmm… Their going to automatically charge my CC and there won’t be any way to cancel or reach a customer service rep to allow me to cancel this subscription”
I am more than happy to pay for items on the ‘Net. Sometimes even spontaneously. I will even buy things from eBay that seem “too good to be true”. But I reject almost every “subscription” offer that comes to me.
Even if it were just a $1. Because at that point it’s principle not cost.
You can thank Intuit, McAfee, Norton, Cox, and Verizon for my jaded view.
-CF
This is innovation?
Since when does innovation mean adding a paywall?
its not about a new twitter
Its not about paid ad free twitter its more about social infrastructure than it is about brand and media. Twitter isn’t going away and neither is Facebook. yes, $50 is too much money for cat photos, free with ads is practically too much. $50 and 10K paying users is to make sure there is interest, I’m sure the funding model will change as its better understood how people are using the infrastructure. I am a dev member and look forward to using it, its a dev story right now not a consumer story. I think the consumer stories will come from places like NYTimes or AOL properties building better social tools into their products to enhance engagement and from things like a secure family feeds and stuff like that. Think use cases that T and FB would not be motivated to support. Its hard to get people psyched about an API but the real meat is on github for all to see. alpha.app.com is just to show its not vapor.
My problem w/ this is that fundamentally, I don’t think this 140 char service is absolutely necessary/essential to people. I think twitter also knows that, and that’s why it’s not putting out the subscription model.
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.
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(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.
Except there are tons of counter examples. As someone else pointed out above, how about your mobile operator or broadband/telco provider? You’re a “customer” there, but they’re not at all aligned with your interests and treat you like shit. I don’t think there’s any argument that having the user as the customer makes them any more attuned to the users’ interests than one who does an ad based model.
(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.
Also, no. We also have a long history of these kinds of networks flopping as people move on. Friendster. MySpace. Yahoo.
Lock in isn’t nearly as big a deal as you seem to think.
Missing the point?
I agree with what you say, but I think it misses the point that when a user pays for a service, the provider is working for them, and not the advertiser. A contract can be made for service that specifies that the provider will never share any usage data with advertisers for this reason. Depending on such possible terms, I may feel far more in control of my experience.
one isn't any better
This really hits the nail on the head. Look at Xbox Live vs PSN. XBL is $60 a year and has more ads than PSN, which is free. I still have my 360, but don’t pay for XBL gold access anymore. I get games i plan on playing online on PS3, and keep the 360 for the exclusives, like Kinect.
Too dismissive of basic ideas, commerce and customer service
It’s certainly true that ad-supported platforms can’t ignore users wholesale. And a lot get the balance pretty well, like the NYT. If users get upset enough, they will leave.
And in fact, some already have left both Facebook and Twitter. But a lot of others will just create Facebook groups asking Facebook to change their policies. When Facebook does not, they will grin and bear it. After all, its free. Also importantly (and unlike a newspaper), people have network effects tying them to social networks. These make them reluctant to walk.
I think it’s silly to say, “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.”
When I walk into a local grocery store, I want to buy food at a reasonable price. They want to sell food to me at a reasonable price. Sure, I want lower prices, and they want higher ones. That’s why, like you said, competition is vital.
But they also want to please the person paying them money. That’s why they try to help me find things, and bag my groceries for free (some offer to walk them to my car). We both want me to have a happy experience so I become a regular. So we’re not “diametrically opposed.”
Any ad-supported service also has to try to please the people paying them money (advertisers). That doesn’t mean they can or want to stab their users in the back at the first opportunity. But the tension is always there.
With app.net, there are only two masters, users and developers. They have to choose prices that seems reasonable to the user and developer base, as well as their company. After that, they strive to please the two paying groups (whose interests are mostly aligned).
There is no tension between pleasing customers and beneficiaries, since they are the same.
Re: Too dismissive of basic ideas, commerce and customer service
Sure, I want lower prices, and they want higher ones.
Ideally, you’d like to have the grocery products for free so you can save money for some more challenging acquisition. Since you can’t have it for free you’ll agree to pay a determined amount of money, preferably tending to zero. At the same time, the vendor wants to earn as much as possible from a single sale, infinity being the ideal value. However he knows that there are factors limiting how much he can charge such as competition and how much value customers perceive in your product. It is diametrically opposed but these desires coexist in equilibrium depending on external sources (demand, supply etc).
There is no tension between pleasing customers and beneficiaries, since they are the same.
The advertisers are some sort of customers of the social network, paying for the other customers eyeballs. If possible they’d like their ads to be forced into the other users in a way that it would force them to buy the advertised product. The social network management knows this and knows that their users will take up to a limit of ad exposure before they’ll leave. So there is indirect tension that is managed by the social network management.
Re: Re: Too dismissive of basic ideas, commerce and customer service
Our price goals are opposed, but our experience goals are not. We both want the person who pays to have a happy experience.
Regarding my tension point, I meant this tension does not exist on services without ads, like app.net. Clearly, it exists on ad-supported services, much as you describe,
Re: Too dismissive of basic ideas, commerce and customer service
And in fact, some already have left both Facebook and Twitter. But a lot of others will just create Facebook groups asking Facebook to change their policies. When Facebook does not, they will grin and bear it. After all, its free. Also importantly (and unlike a newspaper), people have network effects tying them to social networks. These make them reluctant to walk.
But we have already seen people walk from the likes of Friendster and MySpace. That “reluctance” to walk doesn’t seem to hold people back if the service does not serve you.
I agree
If they sold shares I would be listening.
At its core I think this is more about excluding certain types of users more than anything else.
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In practice, it will exclude users who simply never pay for online services (many of whom never pay for online music, etc.)
However, I don’t think app.net is setting the price artificially high so it’s a status symbol or something.
One more model is pending – a donation based twitter – twitpedia
status.net (http://status.net/open-source) has been a mature and viable freedom-protecting alternative to leading proprietary microblogging services for years now: avoiding proprietary software and services is the only real way to avoid being at the mercy of whatever business model web services companies dream up and pimp up with hogwash marketing such as app.net’s.
anyone can try competing in this market by using a solid free software alternative or their own derivatives, without having to make up twisted arguments about how their company respects users, when it obviously doesn’t, being based on proprietary software at its core.
I see your points, but disagree personally.
1. A paid service is primarily interested with keeping its users happy with the service, or they lose business. The primary goal is the users’ happiness. In this respect, they are economically aligned, since the user will only pay for something they LIKE.
2. Advertising-fed services can find themselves at odds with the users when they want to start discussing things which stand at odds with their advertisers. The service is obliged to ‘filter’ content at some level which stands to lose their advertisers money – or they lose the advertisers.
IF twitter could do an advertising-free premium service like spotify do, that could be something which people like me are happy to pay for – to get a cleaner service. But its way too late in the day for that, since the advertisers wouldnt be happy with this turn up for the books.
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1. A paid service is primarily interested with keeping its users happy with the service, or they lose business. The primary goal is the users’ happiness. In this respect, they are economically aligned, since the user will only pay for something they LIKE.
But that argument fails, because the SAME THING is true of a fee based service. They have to be primarily focused on their users’ happiness or their users go elsewhere and the advertisers go with them. Advertisers will only pay for something that has users, and users will only show up for something they like.
Advertising-fed services can find themselves at odds with the users when they want to start discussing things which stand at odds with their advertisers. The service is obliged to ‘filter’ content at some level which stands to lose their advertisers money – or they lose the advertisers.
Again, they can’t get any advertisers at all if they don’t have users, so the users’ interests are still primary.
Again: in my mind, fee-based service providers tend to treat me much worse than free ones. My mobile phone provider is always jacking up prices. Ditto my broadband provider. They certainly don’t put my interests first.
But then I think about the free services I use online, and they often do seem to put my interests first.
I just don’t see how one is more pure than another.
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I had a pretty interesting discussion with James Plotkin above and seemingly we reached this conclusion. I think most of us here (and I include myself and James here) actually missed the point of the article a bit: there’s no purity or lack of purity, there are different business models and both can work just fine. Trying to pretend a free service that relies on ads treats users worse than a paid service is just bs. They both need their primary asset that is their user base. Advertisers will not pay you if you don’t have users and users won’t pay your subscription if you don’t have… well, users.
Spiegelschrank
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advertising agencies
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