One of the commonest arguments from supporters of copyright is that creators need to be rewarded and that copyright is the only realistic way of doing that. The first statement may be true, but the second certainly isn’t. As Walled Culture the book (free digital versions available) notes, most art was created without copyright, when the dominant way of rewarding creators was patronage – from royalty, nobility, the church etc. Indeed, nearly all of the greatest works of art were produced under this system, not under copyright.
It’s true that it is no longer possible to depend on these outdated institutions to sustain a large-scale modern creative ecosystem, but the good news is we don’t have to. The rise of the Internet means that not only can anyone become a patron, sending money to their favorite creators, but that collectively that support can amount to serious sums of money. The first person to articulate this Internet-based approach was Kevin Kelly, in his 1998 2008 essay “1000 True Fans”:
A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free youtube channel; they will come to your chef’s table once a month. If you have roughly a thousand of true fans like this (also known as super fans), you can make a living — if you are content to make a living but not a fortune.
It’s taken a while, but the music industry in particular is finally waking up to the potential of this approach. For example a 2023 post on MusicBusiness Worldwide, with the title “15% of the general population in the US are ‘superfans.’ Here’s what that means for the music business” reported that the incidence of superfans was probably even higher in some groups, for example among customers of Universal Music Group (UMG):
Speaking on UMG’s Q1 earnings call, Michael Nash, UMG’s EVP and Chief Digital Officer, indicated that an “artist-centric” model would look to increase revenue flow from “superfans” – or in other words, individuals who are willing to pay more for subscriptions in exchange for additional content.
“Our consumer research says that among [music streaming] subscribers, about 30% are superfans of one or more of our artists,” said Nash.
In January of this year, the head of UMG, Sir Lucian Grainge gave another signal that superfans were a key component of the company’s future strategy: “The next focus of our strategy will be to grow the pie for all artists, by strengthening the artist-fan relationship through superfan experiences and products.” Spotify, too, is joining the superfan fan club, writing that “we’re looking forward to a future of superfan clubs”. UMG started implementing its superfan strategy just a few weeks later. MusicBusiness Worldwide reported it was joining a move to create a new superfan destination:
A press release issued by Universal Music Group today stated that the NTWRK consortium’s acquisition of [the youth-orientated media platform] Complex will “create a new destination for ‘superfan’ culture that will define the future of commerce, digital media, and music”.
In Goldman’s latest Music In The Air report, it claimed that if 20% of paid streaming subscribers today could be categorized as ‘superfans’ and, furthermore, if these ‘superfans’ were willing to spend double what a non-superfan spends on digital music each year, it implies a $4.2 billion (currently untapped) annual revenue opportunity for the record industry.
For the music industry, then, it’s about making even more money from their customers – no surprise there. But this validation of the true fans/superfans idea goes well beyond that. By acknowledging the power and value of the relationship between creators and their most enthusiastic supporters, the music companies are also providing a huge hint to artists that there’s a better way than the unbalanced and unfair deals they currently sign up to. When it comes to making a decent living from creativity, what matters is not using heavy-handed enforcement of copyright law to make people pay, but building on the unique and natural connection between creators and their true fans, who want to pay.
But, still, plenty of people were uneasy with this setup. And there were good reasons to be concerned. The online ad market is, inherently, cyclical and seems to go through fads. It also raises questions regarding what power the advertisers have over the content. And, of course, there are many security concerns regarding online ads as well. But, most of all, ads tend to be pretty damn annoying in many cases. They are often intrusive and not at all helpful. There are some exceptions, and there are cases where well done ads can actually have value, but those tend to be few and far between.
And so it was inevitable that people would begin to seek out alternatives. A few early internet services started to find some level of success by offering a free version of their service and then eventually upselling users to a premium offering. Venture capitalist Fred Wilson noticed this pattern in 2006 and talked about how it was his favorite business model, but that it needed a name.
Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.
He correctly noted that this kind of setup wasn’t entirely new, pointing to shareware and other offerings, but also highlighted that it worked even better on the internet:
It works even better with web native services. A customer is only a click away and if you can convert them without forcing them into a price/value decision you can build a customer base fairly rapidly and efficiently. It is important that you require as little as possible in the initial customer acquisition process. Asking for a credit card even though you won’t charge anything to it is not a good idea. Even forced registration is a bad idea. You’ll want to do some of this sort of thing once you’ve acquired the customer but not in the initial interaction.
While there were various comments suggesting what this could be called, it wasn’t long until a comment from Jarid Lukin won the day, naming this business model “Freemium.” This caught on almost immediately, and became a pretty standard strategy for many online services, though with mixed levels of success and failure. As an article about the early days of Freemium highlights, Wilson named six companies in his original blog post, and two of them still have a similar freemium setup, two of them still have it but in a deprecated and hidden manner, and two others have dumped the freemium setup altogether.
It’s not a golden bullet, but it remains a useful tool for many web services. Of course, web service is not the same as pure web content, and experiments in freemium for content are a more recent phenomena.
The trickier part when it comes to content is providing that “extra” value that makes the paying part worth it. With a web service, you can figure out some interesting layer of scarcity to make pay-only: it could be more storage, or more features, or less intrusive branding, or more users. There are a variety of different levers you can pull.
With content, it’s harder. To make it work, it still needs to be something scarce to make it worthwhile to purchase, as anything widely available is trickier to convince people to pay for at any reasonable scale. Here at Techdirt, we actually started experimenting with “premium” scarce features back in 2009. We offered merch (scarce), physical signed books (scarce), and even a chance to have lunch or spend a work day with me (something a surprising number of fans actually did!).
We’ve also experiment with other kinds of scarcity such as our Crystal Ball, that lets you access many Techdirt articles before anyone else can see them or access to our Insider Discord chat.
To us, these were always examples of a kind of freemium setup, in which the content (abundant) remained available, but the scarcities cost money. However, the real leap forward with freemium and content came a bit later with various services that offered a kind of hybrid subscription model, which is what we’ll discuss in the next edition (which will come after the holidays, early next year).
Today is the official one year anniversary of Elon getting control over what used to be called Twitter, and now is simply exTwitter. It was supposed to be tomorrow, but in a sign of what was to come, Elon and his buddies maneuvered to close the deal in the afternoon a day early, just to maximize their assholish tendencies.
The closing of the Twitter deal had been scheduled for that Friday. An orderly transition had been scripted for the opening of the stock market that morning. The money would transfer, the stock would be delisted, and Musk would be in control. That would permit Agrawal and his top Twitter deputies to collect severance and have their stock options vest.
But Musk decided that he did not want that. On the afternoon before the scheduled close he methodically planned a jiu-jitsu maneuver: He would force a fast close that night. If his lawyers and bankers timed everything right, he could fire Agrawal and other top Twitter executives “for cause” before their stock options could vest.
It was audacious, even ruthless. But it was justified in Musk’s mind because of his conviction that Twitter’s management had misled him. “There’s a 200-million differential in the cookie jar between closing tonight and doing it tomorrow morning,” he told me late Thursday afternoon in the war room as the plan unfolded.
Of course, it was never true that Twitter management misled Elon. What is true is that Elon didn’t bother to do even the most basic due diligence (and, in fact, waived the right to do so), and signed a contract which basically everyone admits was a massive overpay, that also saddled the company with significant debt.
If we take stock of how things are looking one year in, it can be summed up simply by saying “not great, Bob.” Musk told bankers that he had a clear plan to get the company to be worth $250 billion before long, and the bankers bought it. But so far, basically none of his plan worked. The pitchdeck claimed that he would quadruple revenue to $26.4 billion by 2028. Instead, he’s cut it by at least 60%.
He said he’d more than triple users to 900 million by 2028. Instead, user numbers have been dropping. Indeed, the Wall Street Journal got access to some more data (beyond what we had in the previous post) showing that exTwitter seems alone in losing users, as other sites are gaining them:
Also, you see how it was a gradual decline, and then a steeper cliff after July? Want to know why that is? It coincides, almost exactly, with Musk’s big “rebrand” to “X.”
These aren’t issues of “market conditions” or things that were screwed up through outside forces. Every one of the problems stems directly from Elon Musk having no fucking clue what he’s doing.
He claimed he’d increase average revenue per user by $5.39, and his big idea there seems to have been to co-opt Twitter Blue (which had the kernel of a good idea, but wasn’t marketed very well by old Twitter) and turn it into X Premium (while also, ridiculously, getting rid of actual verification and pretending that X Premium was verification). And that program cannot be described as anything but a colossal failure, with even those who were interested in paying gradually losing interest in continuing. The value just isn’t there.
The best estimate I’ve seen for how many people are paying for X premium is somewhere around a million people. This is well less than half a percent of Twitter’s claimed user base. Now, converting people to premium offerings is always harder than people think, but less than half a percent is embarrassing. Those are the kinds of results that gets people fired. It also means that Elon gave up something in the range of $2.5 to $3 billion in ad revenue… to get back about $100 million in subscription numbers. That’s… bad.
So, no, it does not look like the ARPU numbers are going up to $5.39, and I doubt the plan to charge $1/year for everyone is going to help.
Of course, the banks who lent Elon all this money are now pissed off. They’ve been unable to unload the loans like they’d planned, and are recognizing just how much money they’ve lost on this deal. Apparently, the banks own investors are asking how the banks could have been so fucking stupid to loan Elon money for Twitter:
The X deal should have been a fee bonanza for the banks, who stood to earn tens of millions of dollars on the debt. Instead, their inability to resell it has been an albatross on their lending businesses and prompted questions from their own investors.
Banks limit how much risk they take on at any given time, so holding X’s debt has taken up loan-book capacity that their deal makers would prefer to allocate elsewhere.
But really, the banks have no one to blame but themselves. Too many people fell for the myth of Elon having the Midas Touch, and insisted that he was some sort of ultra genius who could turn any company he touched to gold. But it was fucking obvious from the jump that no matter how much he might have (or might not have) contributed to his other companies, he never had the slightest fucking clue how social media works.
And the astounding thing is that one year in, it’s clear he’s still learned nothing.
Most social media startup CEOs end up going through the learning curve. Eventually, they figure things out. Sometimes it’s too late. But, by the end, they start to understand the basics. The incredible thing with Elon is that he doesn’t appear to have learned anything from his mistakes here.
Perhaps more tragic is that he’s basically destroyed what had been the best place to go for rapid breaking news coverage and analysis. While Twitter was always smaller than the other platforms, it made up for it in being the best “real time” source of news when something big was happening. But, as we’ve learned over the past few weeks, going to exTwitter to find out what’s happening with, say, Israel/Palestine or with the shooting in Maine is an utter disaster. Musk himself initially promoted two grifter accounts with a history of posting completely false nonsense to follow about the Israel/Palestine situation, and given that many more respected/trustworthy news purveyors have reasonably abandoned or limited their use of the platform, exTwitter’s greatest value is basically gone.
That said, he has inspired some unique experimentation in the social media space. At the six month anniversary of the takeover, I wrote about what appeared to be the three big “contenders” to take over the void that Twitter had left open for real time news. Six months later, and there are still tons of interesting things happening. I feel like Mastodon lost a ton of its early momentum by being effectively hostile to people who wanted a new Twitter-like space. I think it’s clear that the team behind Mastodon has realized it needed to adapt, but it feels a little like Mastodon is going to be saddled with being the “Linux” of short form social media: never quite going mainstream, no matter how often its many fans (and I remain one) insist that it’s not as hard to use as you’ve heard.
The new entrant since that post six months ago is Threads, from Meta/Instagram. That obviously hit the market with a huge splash and tons of hype, and then… lost a lot of its momentum, and has been trying to rebuild a space for itself in the market. There have been reports lately that suggest maybe it’s finding its footing, but it still seems a bit shakey. Some of the problem is that it still doesn’t seem to know what it wants to be. At times it acts like it wants to be the Twitter replacement, but then the people behind it keep saying that they’re downplaying the discussion of news on the platform, mainly because they know it gets impossible to moderate. But that also makes people who do want to discuss the news feels somewhat unwelcome.
The big unknown, of course, is if Meta ever actually lives up to its stated plan to federate Threads with ActivityPub, enabling Mastodon users (and users of other Mastodon-compatible ActivityPub implementations) to communicate with people on Threads. People at Meta insist it’s still a part of the plan, and that could be really interesting depending on how it’s implemented. But we just don’t know the details yet.
Six months ago, I had also mentioned nostr, which remains a fun project in its complete embrace of openness, but the project’s leaders seem so naive about what it takes to set up a social media protocol that it’s driving away basically anyone who doesn’t want to just talk crypto all day. I’m still hopeful for interesting projects to come out of nostr, because it has some advantages over the alternatives, but for now it’s just not getting usage outside of a niche.
And then, there’s Bluesky. This remains the one that I’m most hopeful about, and where I’m spending more and more of my time. Six months ago it only had around 100k users, and now it just surpassed 1.75 million, with over 1 million users having posted on the platform at least once. And that’s with it still being gated by an invitation system. I’m unaware of any invite-only app that has gotten that big.
It’s also the one that feels the most like early Twitter.
And also, it’s the one that is clearly thinking about how to actually function as a mainstream platform in the real world, while still setting itself up to be decentralized and not just beholden to whoever controls the company. A few months ago, someone from Bluesky explained that they saw their own future company as a potential threat, and were designing accordingly. Of course, it’s one thing to say that, and it’s another to do it. So far, they’ve been talking the talk, but at some point they need to start walking the walk too. I’m still confident they will, but I know some are quite skeptical. Once Bluesky finally goes federated, we’ll see if they can really find the right balance.
And so, one year in, it’s pretty safe to say that Elon Musk has been truly great at inspiring new and creative ides for better social media platforms. Just not his own.
One of the things we’ve tried to get across over the years (perhaps unsuccessfully), is that not only are laws to get rid of hate speech almost always abused, they’re also counterproductive in the actual fight against hate. For those who support those laws, they seem to think that without them, that means that there is nothing at all that can be done about “hate speech.” But that’s false. There are all sorts of ways to actually combat hate speech, and part of that is in making it socially and economically unacceptable.
For years, people have kept insisting that social media companies have “no incentive” to keep hate speech off of their platforms, and for years, we’ve explained why that’s wrong. If your platform is overrun with hate speech it’s bad for the platform. Users start to go elsewhere. And if your business model is advertising, so do the advertisers.
And now we have some empirical evidence to show this. CCIA has released a report on the impact of harmful content on brands and advertising, done through creating surveys of users in hypothetical scenarios on social media where hate speech is and is not moderated Turns out, as we said, if you allow hate speech on your website it drives users and advertisers away (someone should tell Elon). It also makes users think poorly of the advertisers who remain.
In a hypothetical scenario where hate speech was not moderated on social media services, research also found negative implications for brands that advertise on the services when hate speech was viewed. Proximity to content that included hate speech resulted in some respondents reporting that the content made them like the advertiser less. It also resulted in a slight decrease in favorable opinions of the advertiser brand, as well as a larger change in net favorability, with some of the movement shifting from favorable opinions to neutral (i.e., neither favorable nor unfavorable) opinions. Respondents who viewed content with hate speech also reported a lower likelihood of purchasing the advertised brand that directly preceded the content, compared to those respondents who viewed social media content with a positive or neutral tone right after the ad.
The results suggest that consumer sentiment toward a social media service would decline if it did not remove user-generated hate speech, and that consumer sentiment would also decline for brands that advertise on the same platform adjacent to said content. These findings indicate that social media services have a rational incentive to moderate harmful content such as hate speech and are consistent with digital services’ assertions that not all engagement adds value and that, in fact, some engagement is of negative value.
While this particular paper actually seems targeted at responding to laws on the other side of the aisle — such as the contested laws in Texas and Florida that would create “must carry” requirements for certain forms of speech, I think the argument applies equally as well to states like New York and California that are trying to pressure companies with legal mandates to remove such information.
However, a number of “must-carry” bills have been proposed in various jurisdictions that, if enacted, could limit social media services’ ability to remove or deprioritize harmful user-generated content. Two such bills recently became law in Texas and Florida, but are not yet in effect, due to pending consideration by the U.S. Supreme Court. Until this paper, there has been little public-facing research exploring the implications of hypothetical legal requirements that would require social media services to display content that would otherwise violate their current hate speech policies.
The study here is basically highlighting that both types of laws are bad. For Texas and Florida, it’s bad in that it would do real damage to the business models of these companies, because the market (remember when the GOP was supposed to be the party supporting the free market?) is telling websites and advertisers that they don’t want hate speech on their platforms.
As these surveys show, websites moderating hate speech are doing so for perfectly legitimate business reasons (to avoid having users and advertisers flee). It’s not because they’re “woke” or trying to silence anyone. They’re just trying to keep the people on their platform from killing each other.
And, the study is also suggesting that the laws in California and New York don’t help either, as the companies have financial incentives to avoid platforming hate speech as well. They don’t need a law to come in and tell them this. The market actually functions just fine as a motivator.
Copyright seems to be a fixture of our legal, economic and social systems. For 300 years, it has formed the backbone of the structures used to incentivize and remunerate creators. During that time, copyright has been extended repeatedly in length and breadth. The original term of the 1710 Statute of Anne – 14 years’ monopoly protection with a provision for renewal for a further 14 years – has blossomed into life plus 70 years for much of the world. Copyright now applies to areas far beyond the original scope of printed works. These constant and unidirectional moves by legislators around the world might seem to confirm that copyright is an effective approach where more is better, and that it is working as a means of rewarding artists fairly. The facts suggest otherwise.
For example, in 2018 the US Authors Guild conducted a survey of US writers. It revealed that the median author income was $6,080, down from $8,000 in 2014, $10,500 in 2009 and $12,850 in 2007. Respondents who identified themselves as full-time book authors still only earned a median income of $20,300, even including other sources of income such as teaching. That is a level that is well below the US federal poverty line for a family of three or more.
In the world of academic publishing, the situation is even worse: authors are typically not paid for their work at all. No wonder, then, that the leading academic publisher Elsevier has consistently enjoyed profit margins of 30-40% – far beyond what companies in other industries ever achieve. Moreover, academics are routinely required to assign the copyright of their work to the publishing companies. This has the effect of making it hard or impossible for researchers to share their own papers and results with colleagues unless they seek and are granted permission by the publisher. In this case, copyright impedes wider access to knowledge, and acts as an obstacle to the collaborative approach that lies at the heart of research.
Things are also bad in the music industry. A report published by a UK Parliament committee found in 2021 that “the terms under which the major music groups in particular acquire the rights to music favor the majors at the expense of the creators”. This has resulted in an average income for performers that is less than the median wage.
One possible explanation is that music streaming services and Internet platforms retain a disproportionately large share of the revenues they generate, and pay artists too little. A new report from the UK’s Competition and Markets Authority (CMA) explores this issue in detail. It found that “music streaming services are not making sustained, excess profits: indeed, our analysis has shown that many services have low or negative operating margins.” Another concern is that a large “value gap” might exist between what platforms like YouTube pay to artists, and what streaming services like Spotify pay for similar works. The CMA found that in 2021 the gap, such as it was, amounted to less than 0.5% of the £1,115 million total UK recorded music revenues that year – about £5 million. Shared among the 400,000 creators releasing music in the UK in 2020, that would represent an average “missing” payment of around £12 per year.
Even superstars struggle under the current system. There are few more popular musicians than Taylor Swift: her most recent songs occupied all ten of the top positions in the U.S. singles chart. And yet even she lost control of her early songs as a result of being required to assign the copyright to recording companies. Her solution was extreme: in 2020 she announced that she was re-recording those songs in order to retain rights to the new master recordings.
Copyright seems to serve the public well enough – there’s no shortage of books, music or films being produced each year. But here, too, there are problems, albeit of a less obvious kind – for example, the issue of orphan works. These are works, typically books, that are still covered by copyright, but unavailable because the original publisher has gone out of business, or simply isn’t interested in keeping them in circulation. Copyright means that unless the current owner can be located – a difficult task for obscure works that were created decades ago – it is against the law for someone else to reprint them. Nobody benefits from this, but attempts to address this situation, like the EU’s Orphan Works Directive have been half-hearted and ineffectual, and the problem remains.
The situation is arguably worse in the world of cinema. While books held in libraries are durable, and are likely to survive until such time as their copyright expires and reprints may be made, that’s not true for films, which often exist as a unique copy on extremely flammable or delicate media. It is estimated that already half of all U.S. films made before 1950 have been lost, while the figure for films shot before 1929 is over 90%. Copyright restrictions prevented copies being made of the films, which could have preserved them for posterity.
Nor is the digital world immune to this problem. The world of video games is already suffering because of copyright, which makes academics reluctant to risk transferring video-game code from older media such as floppy discs to newer, more reliable systems, for example cloud storage, in order to make backups. It also stops them from creating software emulators of the hardware needed to run old games. As a result, even when copyright protection on a game expires – in a century or so – there is a danger that copies of old video games will be unplayable because the media on which they are stored has degraded, or there is no hardware available on which to run them.
One of the main reasons that artists tolerate a system that sees most of them struggling to get by is that copyright is presented as the only way in which they can be rewarded for creating new works for the public. That may have been true in the past, but is no longer the case: the spread of the Internet means that there is now an alternative channel for creators to reach out to their audience. Music, books and films placed on a web site can be downloaded by anyone with an Internet connection, anywhere in the world. That global reach also allows completely new business models to be explored.
Perhaps the most promising of these is the “true fans” model, first articulated by Kevin Kelly in 2008. Instead of receiving a small cut of the sales revenues of works handled by intermediaries like publishers and recording companies, creators are paid directly by their most engaged, “true” fans, and keep almost all the money. That means a smaller number of true fans can provide the same level of financial support that a larger number of today’s customers offer. True fans typically pay regularly, and in advance of a work being created. The approach provides a steady income for an artist, and helps alleviate the fear of being without income until a work is finished and placed on sale.
The near-ubiquity of the Internet means that it is now possible for a creator to find true fans around the world willing to support their work, and for the latter to pay directly, using well-established services like Patreon and Kickstarter etc. A good example of how a well-known creator can use a crowdfunding platform to support work is the writer Cory Doctorow, the first person to be interviewed on Walled Culture. In 2020, when Doctorow’s publisher could not afford to pay for an audio version of his latest book, he asked his fans to fund it. Within a month, he raised $267,613.
Not everyone commands the level of support that Doctorow has garnered, but this example does at least indicate the potential of the true fans approach as an alternative to today’s copyright. The scale of this fan-based patronage ecosystem is under-appreciated. According to one research report, crowdfunding was valued at $17 billion in 2021. By 2028, the global crowdfunding market is projected to grow to $43 billion, with an average compound growth rate of 16.5% over the forecast period. Not all of that will go to creators, but many billions certainly will, which will put it on a par with payments made by traditional intermediaries such as publishers, film studios and music labels.
An interesting aspect of the true fans approach is that it although it is fully compatible with copyright, it does not require it to work. Crowdfunding aims to fund future production, by supporting artists as they create. After a work is finished and released, it is not necessary to invoke copyright law to punish unauthorized copies, since the artist has already been rewarded. Indeed, there is an important advantage in encouraging copies to be shared widely: it allows an artist’s work to be discovered by more people around the world, some of whom will go on to become true fans and to contribute money towards future work. Even mis-attributed copies can ultimately lead fans to the original source, bolstering an artist’s reputation and – potentially – finances.
This form of crowdfunding would eliminate one of the biggest problems with copyright today: the need to stop people making unauthorized copies of digital material under copyright. Every attempt to achieve that over the last twenty-five years has failed – whether through huge fines, threats of Internet disconnection or, most recently, by requiring upload filters, as the book Walled Culture explores in detail (free ebook versions available). These efforts are futile because we live in a digital world where billions of people have a cheap copying machine in their pocket: a smartphone. They use it routinely hundreds of times a day to make perfect copies, which they send out over the Internet to family and friends, who make further copies, and pass them on. Trying to prevent this sharing means fighting against both technology and human nature – a lost cause, as history shows.
A wider use of crowdfunding and the true fans approach could help address the poor rewards that the vast majority of creators receive under today’s business models relying on copyright. It might also see the importance of copyright diminish to the point that it is no longer regarded as indispensable, or requiring yet more ineffectual laws in a doomed attempt to enforce it online.
You have to love a story that comes full circle after all these many years. For a long, long time, we at Techdirt have been advocating for business models that make use of free content. The idea, which can certainly be counterintuitive, is that if you make parts of your product free to the customer, particularly the parts that are reproducable at zero marginal cost, then you can build in value-adds one way or another that you can charge for. Whatever you lose in not charging for some content, you can make it up via an increase in reach and/or market share, assuming you do it well. At this point, the examples of such business models are ubiquitous, but it wasn’t all that long ago that you would hear executives from various industries flatout state publicly that “nobody can make money from ‘free’.”
Ah, the irony. Rovio, the company behind the Angry Birds franchise, just shut down its last remaining paid version of the games. Why? According to Rovio, the paid version was interfering with the much more profitable free versions of its games.
In a tweeted statement earlier this week, though, Rovio announced that it is delisting Rovio Classics: Angry Birds from the Google Play Store and renaming the game Red’s First Flight on the iOS App Store (presumably to make it less findable in an “Angry Birds” search). That’s because of the game’s “impact on our wider games portfolio,” Rovio said, including “live” titles such as Angry Birds 2, Angry Birds Friends, and Angry Birds Journey.
All of those other Angry Birds games are free-to-play titles in which players can earn extra lives or helpful items by purchasing in-game currency or watching short video ads. Those changes were roundly criticized when they were introduced into the Angry Birds universe, but that didn’t stop the free-to-play games from becoming highly lucrative for Rovio.
How far we’ve come, from “you can’t make money from free” to “our paid apps are keeping us from making even more money from free!” And it’s not for lack of the paid product being popular. According to Ars Technica, Rovio Classics: Angry Birds is currently the 2nd best-selling app that requires payment in Apple’s App Store, except:
But that chart-topping position translates to just $30,000 in estimated monthly revenue, according to Sensor Tower estimates. The free-to-play Angry Birds 2, meanwhile, attracted 900,000 new free-to-play downloads last month and raked in over $9 million in revenue, according to those same Sensor Tower estimates. But that strong revenue number is only enough to make Angry Birds 2 the 74th highest-grossing iOS game on the current iOS charts.
The post notes that this shows that the general public is not willing to pay for these kinds of apps at scale… but that’s really only part of the story. It is true that the public has become accustomed to freemium-style mobile games, but that’s only because so many of them have worked so well from companies that have pulled off the business model equation correctly.
Put another way, if these games were absolute garbage, no amount of free content would be enough to get the public to play them. In addition, if the paid-for portions of the game didn’t provide enough value, or if the embedded advertising were too intrusive or annoying, then people would likewise not play these games. To make $9 million in revenue from just one of these games requires those sweet-spots to have been hit, which Rovio did.
So much so, that asking the public to pay for the base content hurts the bottom line.
A new report claims that more than a third of Twitter’s biggest advertisers have now pulled their ads from the platform, as the unstable and unpredictable nature of the new owner, combined with his implicit encouragement for hate, has made the site less and less welcoming to the brands with money to spend.
Dozens of top Twitter advertisers, including 14 of the top 50, have stopped advertising in the few weeks since Musk’s chaotic acquisition of the social media company, according to The Post’s analysis of data from Pathmatics, which offers brand analysis on digital marketing trends.
Ads for blue-chip brands including Jeep and Mars candy, whose corporate parents were among the top 100 U.S. advertisers on the site in the six months before Musk’s purchase, haven’t appeared there since at least Nov. 7, the analysis found. Musk assumed ownership of the site Oct. 27.
[….]
Pharmaceutical company Merck, cereal maker Kellogg, Verizon and Samuel Adams brewer Boston Beer also have stopped their advertising in recent weeks, the Pathmatics data shows. The companies didn’t respond to requests for comment from The Post.
The article notes that the timing of all this isn’t great, especially as the World Cup is happening, which historically has driven tons of traffic to Twitter.
And if you want to know why advertisers are running away, perhaps it’s because hate speech is now super viral on the site, as compared to under the previous regime. Another study, from Tufts, which has access to the Twitter firehose, has found that hatred and harassment is now found a lot more often in tweets that are going viral.
For the months prior to Musk’s takeover, the researchers deemed just one tweet out of the three top 20 lists to be actually hateful, in this case against Jewish people. The others were either quoting another person’s hateful remarks or using the relevant key words in a non-hateful way.
In the weeks after Musk took over Twitter, the same analysis found that hateful tweets became much more prominent among the most popular tweets with potentially toxic language. For tweets using words associated with anti-LGBTQ+ or antisemitic posts, seven of the top 20 posts in each category were now hateful. For popular tweets using potentially racist language, one of the top 20 was judged to be hate speech.
“The toxicity of Twitter has severely increased post-Musk’s walking into that building,” says Bhaskar Chakravorti, dean of global business at the Fletcher Business School at Tufts University and chair of Digital Planet, which carried out the analysis.
And, that’s not surprising considering that Musk continually gives both tacit and explicit approval to those who are spewing hatred. He mocked the head of the ADL earlier this week, which resulted in tons of tweets that I saw from people gleefully talking about how Musk clearly supported their anti-semitic views. He regularly interacts with folks who have pushed similar hatred and harassment campaigns, pretty explicitly suggesting that they are trustworthy accounts, rather than culture war grifters.
The whole situation is bizarre, frankly. At the same moment that he’s complaining about advertisers bailing, and refusing to take responsibility for them doing so, he’s egging on the hate and harassment. It’s unclear if he just doesn’t understand any of this, doesn’t care, or just assumes that the hate and harassment will lead to more usage, and that will magically make the advertisers come back?
In the meantime, I’ve noticed that each time I check in at Twitter, the ad quality gets worse and worse. It used to be big brands with fairly ignorable ads. Now I keep seeing random religious ads, including one that literally was just a tweet praising God, and another… for Scientology.
I somehow doubt those are going to make up the difference in a way that allows Musk to pay his creditors.
Going back many, many years, we’ve argued that paywalls are not a particularly sustainable model for most journalism enterprises. There are some exceptions. They seem to work in cases where breaking news and timely access are extremely important (e.g., financial news), and in cases where there is a strong community built up around the news provider (both small and large). A few months back I did a fun podcast discussion looking at why I was wrong when I predicted the NY Times paywall would fail. It’s worth listening to the whole thing, but the crux of it was that I didn’t expect the NY Times to be able to build up the kind of communal support that it eventually did — whereby many people felt that, in the age of Donald Trump, they had to be supporting media organizations like the Times.
But, still, I strongly believe that most general interest news orgs will find a paywall does not work and it actually harms the journalism the news organization is attempting to do. Over the years, we’ve seen various news organizations that gleefully put up a paywall back down and admit defeat as they removed the paywall, often noting how few readers actually paid, and how it actually tended to boost competitors without paywalls.
The latest to do so is the Chicago Sun-Times, which has announced that it has now dropped its paywall. What’s most interesting to me is that the newspaper seems almost joyous about this decision in its announcement, recognizing it can better serve the people of Chicago this way.
As a reader of the Chicago Sun-Times, you turn to us for the news you need to thrive. For timely, accurate and fairly reported stories on the issues that matter most. For stories that celebrate and honor the members of our community, from victories on the field to remembrances of lives well lived. Our journalists care about your community because it’s our community, too. And we strongly believe that everyone in the Chicago area should have access to the news, features and investigations we produce, regardless of their ability to pay.
So today, we are dropping our paywall and making it possible for anyone to read our website for free by providing nothing more than an email address. Instead of a paywall, we are launching a donation-based digital membership program that will allow readers to pay what they can to help us deliver the news you rely on.
It’s a bold move: Reporting the news is expensive, and the converging market forces of inflation and an anticipated (or possibly already here) recession could further endanger local newsrooms like ours. But we know it’s the right thing to do.
For the Sun-Times’ next chapter to be successful, it is essential for us to be truly open and inclusive so we can tell the stories that matter to all parts of our community. A membership program connects our revenue model more closely to how well we serve our community, holding us accountable to you, our readers. We think that’s a good thing, because if we’re not serving you, we’re not doing our jobs. So we’re taking a leap of faith and putting our trust in you.
This is a really open and honest announcement, noting that it still does need the support of readers to survive, but rather than beating people over the head with a paywall, and basically treating people who want to see the news as potential thieves, the Sun-Times is being open, and honest, and treating its community with respect. Hopefully it works out better than the paywall approach. It would be great to see more news organizations realize that locking up all your content is often a path to irrelevance.
There’s a fascinating article by Rebecca Jennings on Vox which explores the vexed question of plagiarism. Its starting point is a post on TikTok, entitled “How to EASILY Produce Video Ideas for TikTok.” It gives the following advice:
Find somebody else’s TikTok that inspires you and then literally copy it. You don’t need to copy it completely, but you can get pretty close.
If it’s not “literally” copying it, then it’s more a matter of following a trend than plagiarism, which involves taking someone else’s work and passing it off as your own. Following a trend is universal, not just online, but in the analogue world too, for example in business. As soon as a new product or new category comes along that is highly successful, other companies pile in with their own variants, which may be quite close to the original. If they offer something more than the original – extra features, a new twist – they might even be more successful. However unfair that might seem to the person or company that came up with the idea in the first place, it’s really only survival of the fittest, where fit means popular.
More interesting than the TikTok advice is the example of Brendan I. Koerner, contributing editor at Wired and author of several books, also mentioned in the Vox article. It concerns a long and interesting story he wrote for The Atlantic last year. Jennings explains:
Someone published a podcast based exclusively on a story [Brendan I. Koerner]’d spent nine years reporting for The Atlantic, with zero credit or acknowledgment of the source material. “Situations like this have become all too common amid the podcast boom,” he wrote in a now-viral Twitter thread last month.
I’ve not listened to the podcast (life is too short), so I can’t comment on what exactly “based exclusively on” means in this context. If it means taking the information of Koerner’s article and repackaging it, well, you can’t copyright facts. Multiple verbatim extracts is a more complex situation, and might require a court case to decide whether under current copyright law it’s allowed.
I think there are more interesting questions here than what exactly is plagiarism, which arises from copyright’s obsessions with ownership. Things like: did Koerner get paid a fair price by The Atlantic for all his work? If he did, then the issue of re-use matters less. It’s true that others may be freeriding off his work, but in doing so, it’s unlikely they will improve on his original article. In a way, those pale imitations serve to validate the superior original.
If Koerner wasn’t paid a fair price, for whatever reason, that’s more of an issue. In general, journalists aren’t paid enough for the work they do (although, as a journalist, I may be biased). The key question is then: how can journalists – and indeed all artists – earn more from their work? The current structures based around copyright really don’t work well, as previous posts on Walled Culture have explored. One alternative is the “true fans” model, whereby the people who have enjoyed your past work become patrons who sponsor future work, because they want more of it.
For someone like Koerner, with a proven track record of good writing, and presumably many thousands of fans, this might be an option. It would certainly help to boost his circle of supporters if everyone that draws on his work gives attribution. That’s something that most people are willing to add, as his Twitter thread indicates, because it’s clearly the right thing to do. Better acknowledgement by those who use his work would always be welcome.
On the issue of drawing support from fans, it’s interesting to note that the Vox article mentioned at the start of this post has the following banner at the top of the page:
Financial support from our readers helps keep our unique explanatory journalism free. Make a gift today in support of our work.
This is becoming an increasingly popular approach. For what it’s worth, I now support a number of titles and individual journalists in precisely this way, because I enjoy their work and wish to see it flourish. The more other people do the same, the less the issue of plagiarism will matter. Once creators are earning a fair wage through wider financial support, they won’t need to worry about “losing” revenue to those who free ride on their work, and can simply view it as free marketing instead, at least if it includes proper attribution to the original. The main thing is that their fans will understand and value the difference between the original and lower quality derivatives.
We have written several times about the “true fans” idea as an alternative approach to the traditional remuneration models employed by the copyright industry players, such as publishers, recording companies and film studios. It’s a simple approach: get the people who really love an artist’s work to support it directly, and in advance, rather than indirectly through buying things after they’ve been created. If that sounds rather soft and utopian, it’s not: it can also be run as a business, as this story on Axios makes clear:
The Jonas Brothers are helping to launch a new subscription media company called Scriber that allows celebrities to charge their biggest fans for exclusive content via text messages.
Why it matters: The goal is to bring the subscription economy to Hollywood without using Big Tech platforms as intermediaries.
According to the article, the Jonas Brothers have 50 million Instagram followers in total, so if 1% of them were willing to pay the $4.99 monthly subscription fee, that would generate in the region of $30 million a year, less payment processing fees, which will be relatively small. Even if only 0.1% are keen, that’s still $3 million per year. According to Axios, users of the new service will receive “exclusive material — like behind-the-scenes videos, exclusive merchandise and early access to tickets — via text message links pointing to content that’s pre-loaded for extra fast browser viewing.”
What’s most interesting about the move is not any of the above details, which are specific to well-known names like the Jonas Brothers, but the fact that Scriber is designed as a general platform that can be used by any artist:
Scriber will charge all celebrity creators $1 per month for every subscriber that uses the service. Because Scriber works with celebrities on the back end of the deal, most users will not realize Scriber is powering their transactions.
It’s a great example of how the true fans model not only benefits artists and their followers, but can also be the basis of a new kind of intermediary. But it is one that takes only a relatively small cut of the money, unlike the current system sustained by copyright whereby most money ends up in the pockets of the corporates, not the creators. Expect to see many more experiments like Scriber.