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What if we could subscribe to the social web through a centralized micro-payment platform that sustains the medium while supporting good causes? Would anyone pay?
We’ve got a business idea. Actually, it’s an idea for a foundation that could lead to business opportunities. And we’re going to share it, for better or worse. First, here’s the problem.
The social web is built on being open and free. Social networks, social news, blogs, lifestreaming, video sharing, social media aggregators, etc. They’re all valuable and yet they’re all free to use. By the same token, at least half of their value is a function of people using them. Where would YouTube be without user-generated videos? Where would Digg be without user-generated headlines? Where would Max Gladwell be without your thoughtful comments on this post? The problem is monetization.
Most revenue models are based on advertising, and few are able to support growth or valuations with ad revenue alone. Therefore, it’s up to a Microsoft or Google or Yahoo! to acquire these companies and thus provide the only realistic exit. In which case the founders and VCs cash out, and the Internet conglomerates get bigger and more powerful. Is this a bad thing? Not necessarily. Would it be preferable if these social media companies could actually sustain themselves and maintain their independence? Certainly. Especially considering the worst-case scenarios.
The Web 2.0 bubble and imminent burst is the subject of much speculation. What happens when the music stops and investment dries up and you can’t get that next round? Again, either sell to Microsoft for a song or close up shop. So how do we preserve the social web and make it sustainable? We’re proposing a new nonprofit foundation that will manage our collective subscriptions. Here’s how it would work.
Three groups provide value to the social web: service providers, content creators, and consumers. Many of us play multiple roles. Facebook and Flickr are service providers. Bloggers are creators. We’re all consumers. This foundation would provide a central hub where service providers and content creators could earn subscription fees from consumers.
For example, Twitter signs up with the foundation as a service provider, making it eligible to receive fees from subscribers. Max Gladwell signs up with the foundation as subscriber and pays an initial $10. Subscription fees would be deducted as we used various services to which we subscribed. As a Twitter user, Max Gladwell could opt in to be a paid subscriber, by way of a simple check box in the Twitter profile, and pay a few pennies per Tweet or some small monthly rate. It’s entirely voluntary, and you can opt out at any time while continuing to use the service. StumbleUpon allows you to become a “sponsor”, which is similar, but it requires running a credit card or Paypal. We’re a sponsor but only a handful of our “friends” are. Still, it’s an encouraging sign. Perhaps the buy-in rate would be higher if there was a better system.
By centralizing the subscriptions, one could seamlessly subscribe to (and support) any blog, photo sharing service, social network…any social media resource that participates in the foundation. We realize that it’s too burdensome to individually subscribe to every blog or social news site we use. Plus, the transaction costs would be prohibitive. Having a single subscription account with micro payments makes it not only efficient and possible, but it can also function as its own aggregator, providing a record of your social media use–the blog posts you’ve read, the people you’ve friended, the stories you’ve submitted, the videos you’ve favorited–together with any micro payments you’ve been charged.
As a nonprofit foundation, the organization will provide a sustainable revenue model for the social web. It’s basically crowdsourcing a revenue model. That’s the mission and social benefit. But it can also support other causes and nonprofits. Signing up for either a subscription account or a service provider/content creator account would also include choosing a charity to support. A portion of the fees, both from the paying and earning sides, would be donated to charities. So it’s doubly good.
Here’s why it won’t work: people won’t pay for anything they already get for free. Fair enough. But who would have thought Wikipedia, a 100% voluntary online encyclopedia, could ever have been successful? There is a tremendous generosity on the social web in terms of our time. Given the right model, might people also open their wallets to support their favorite blogs and services, especially if it’s also supporting good causes? Many have said they’d pay for a more reliable Twitter. Would they also pay for a more balanced and sustainable social web? The net impact could be substantial.
Consistent with the principles of social media, this foundation would put control in the hands of users. By controlling the flow of revenue, it shifts power from advertisers, VCs, and conglomerates to the people. Imagine if Twitter’s revenue model was dependent on voluntary user subscriptions and Microsoft acquired them. Many would opt out of paying but continue using the service. The revenue would disappear. So while the foundation could facilitate more sustainable business models, it could also impact valuations and exit opportunities. Companies might have no choice but to remain independent, since their profitability would likely depend on it.
In some ways, this foundation would help the social web to function like KCRW (best radio station ever). The vast majority listen to this quality, commercial-free radio station for free aka the freeriders. But enough of us make contributions (paying voluntary subscriptions) to sustain its excellent programming. This isn’t to say that these blogs and social networks can’t run advertising. If it’s reasonable and done well, users will still subscribe. After all, this is micro payments…pennies per view or post or friend. Most would be hybrid models like print magazines or cable TV (but better, of course). Gaining financial support from users could make all the difference–a good cause in and of itself–while simultaneously supporting other good causes.
In terms of structure, this nonprofit foundation would pass 100% of the fees to service providers, content creators, and charities. It would sustain itself through grants and other revenue opportunities (TBD).
We look forward to comments on this idea. If nothing else, it’s an interesting thought experiement. Perhaps there’s something like it that we don’t know about. We’ve not made any estimates about potential rates and revenue opportunities. It’s all conceptual at this point. If anyone wants to take the conversation offline, feel free to drop an email to rob [at] maxgladwell dot com.
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8 responses so far ↓
1 BC Wilson // Jun 30, 2008 at 11:22 am
Great idea, Max!
I think you’re on to something with the analogy to public radio. It’s a model for revenue-generation that works to support content in the public interest, rather than in private (corporate) interest. It takes a lot of work to maintain the model, and causes some disruption of the content flow (think pledge drives), but people put up with it because of the undeniable net benefit of having something like 11 months a year of uninterrupted, highly-informative programming.
One part of your idea did seem off, however. You suggest that none of the fees collected would support the foundation. I don’t know that this is a reasonable expectation. In the public radio example, a significant amount of the fees collected go to cover administrative overhead. I think as long as the total amount spent on administration is kept to a reasonable maximum, there should be no reason to preclude this for the Social Media Foundation, or whatever it would be called.
At any rate, I’m extremely interested. Let’s keep talking!
2 Max Gladwell // Jun 30, 2008 at 11:41 am
BC: The idea is for the foundation to facilitate the subscriptions and flow of revenue. One central platform that everyone can participate in. Sites shouldn’t have to take time away, like public radio, to promote it. They can mention it once in a while, and they can run advertising since ads on blogs and most of the web are not entirely disruptive like radio. For example, I’d have a simple button in the upper right part of the MG blog next to RSS where you’d opt in (or opt out) to subscribe. It could even be integrated with RSS. Simple and easy.
I have other ways that the foundation can sustain itself. It won’t need to take any of the fees that would otherwise go to social media providers, content creators, or good causes. All of that gets passed through.
Thanks for the comment!
3 Holly // Jul 1, 2008 at 9:45 am
It’s good that you are talking about this. It’s true, people would pay for a more reliable twitter, but not everyone. The difficulty in creating a revenue sharing model is these services don’t charge a fee and some have no advertising. They seem to be buyout bait in most cases. I’m not sure if a foundation is the answer, but it’s good to get the discussion started somewhere. Thanks!
All the Best,
Holly
twitter.com/mobienthusiast
4 Will Boyd // Jul 1, 2008 at 9:51 am
This is an interesting idea. I would definitely be willing to pony up monthly to ensure that the sites I love stay available. As I read the post, I kept thinking “Social Web Co-op”. I think the only way we will be able to protect the open nature of the social web is if we the consumers own it in some way. Your idea is definitely one way of doing so.
What, if anything, would change about your idea under the following scenario? A consumer could log onto the foundation’s website and choose to pay a monthly donation. That consumer would then be able to select all of the social web services that they use. That consumer’s monthly donation would then be divided between the web services. If the consumer stopped using one service, they could uncheck that service on their account at any time.
Just an initial thought. I’m sure there are lots of problems with it. I am excited about this line of thought, though. I don’t want to lose services like Twitter.
5 Max Gladwell // Jul 1, 2008 at 10:02 am
Will: That’s one way of doing it. I definitely see the foundation serving as the de facto role as an aggregator, but the services would have to opt in as well. If Twitter doesn’t want the $$, you can’t make them take it.
I also think the fees could be flexible. You could pay per photo, per friend, per post, or per month. I also see bloggers and vloggers as big participants, and there are millions. So it would be possible to centralize it but maybe just as easy to locate the opt-in at the point of consumption.
I also think there’s a way for people to pay YouTube video creators, as opposed to YouTube itself. If you’re logged in, you could opt to pay a couple pennies per view or maybe 25 cents per favorite…with a portion going to your charity of choice and a portion going to the creator’s charity of choice.
6 BC Wilson // Jul 1, 2008 at 10:22 am
This idea needs a diagram. Some sort of infographic to illustrate the relationships between the parts…I’ll get to it in a day or two if I can, but if anyone else is faster, please go ahead.
7 Joe Solomon // Jul 1, 2008 at 6:22 pm
Rob – Way to go for sharing this idea! I think this idea has a lot of potential! My suggestion is to initially focus on one platform and empowering that platform’s content creators to earn revenue for their work. For me, the question is how do you empower YouTube stars to be a part of this program without YouTube being involved. Maybe it’s a separate chipin site just devoted to YouTube video makers — which as a video producer I could point my viewers to. Or maybe it’s a Firefox Extension that I could ask my fans to download and integrated with the YouTube site. Hmmmm….Lots of potential indeed!
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