It all comes down to whether people will actually pay or not. Wikipedia runs off donations but they still get a lot of slack when it comes to their yearly banners asking for donations. Whenever NPR asks for money, it annoys users similarly. Would people be more or less annoyed with them if they had a ton of ads? Both wikipedia and NPR are also lucky because the people who see their value are the same people who have money to donate. Facebook and Twitter aren't so lucky. Social media managers and companies will shell out a monthly fee for services like HootSuite so hypothetically, if Twitter/Facebook added features for companies, they could sell that service. Unfortunately, the goal of the company then switches from providing Facebook/Twitter to consumers and providing additional services for social media managers and brands. Whenever this occurs, the service is no longer as valuable to consumers and subsequently, the brands attempting to reach those consumers. I've often thought about what would happen if Facebook attempted an advertising or donation model: if I donate $X/month, I wouldn't have to see ads. The problem is: the value of the ads is probably more that what I am willing to donate. Furthermore, if the donation model takes off, the price of the advertisements heavily declines. If a majority of your target demographic is donating to Facebook to hide the ads, why would you pay to attempt to advertise to them? The biggest challenge with monetization of community type sites is that in order to get new users you have to focus on the people and the community. If you start giving people who pay a bunch of features, those who don't pay will be left out. If they are left out, you can never turn them into paying customers. Donations take away the direct need for two separate feature sets but, as there is no real incentive for donating, you better have a ton of people who love you or a noble goal to make it work. If you, as a consumer, want something amazing, amazing people have to spend an amazing amount of time building and maintaining and updating it. Without profits, those people can't put 100% of their time and energy into the product or service. Profits enable people to work on the project full time and continue adding features month after month, year after year. If Facebook was given X dollars/year to keep the site up and running, do you think they would be take the time to develop a completely new mobile app? Do you think the UI would have gone through so many different updates? It would probably look exactly the same way it looked when they started receiving the public funds. It could've never scaled to the size it is today without the profits and possibilities as an incentive. It would be interesting to see where libraries would be today if they were run for profits. Can you imagine the services they would be forced to provide to stay up to date, relevant and keep the money flowing in? I don't know about your library, but we still have CRT monitors in mine.I'm a bit troubled by this automatic assertion that web platforms should be profit-maximized
You don't think enough people who get utility out of Facebook and Twitter have money to donate? I don't have any numbers to argue with, but I'm not convinced that this is obviously the case. I would think that if Facebook put up something saying "Hey, we're getting rid of ads and trying to build a community-supported platform," some of their 1.2 billion users would be willing to put some money in. Doesn't the freemium model completely contradict this assertion? Reddit Gold gives additional features to users who pay for it, and those without Reddit Gold don't seem to be complaining. Are you sure you're not mixing up revenue and profits? I'm not an expert in accounting, but I'm pretty sure a company can still operate at full capacity if it receives enough money to pay its employees' salaries and other expenses. Or perhaps you mean "profit" in the more general sense of "making a boatload of money," implying that the amount of money to be made from donations or premium features is not enough to sustain a useful platform. That's a legitimate concern.Both wikipedia and NPR are also lucky because the people who see their value are the same people who have money to donate. Facebook and Twitter aren't so lucky.
If you start giving people who pay a bunch of features, those who don't pay will be left out. If they are left out, you can never turn them into paying customers.
Without profits, those people can't put 100% of their time and energy into the product or service.
Yes and no. Reddit is an interesting example because the features you get with Reddit Gold aren't that special. IIRC, they have added more recently but back when they launched it, you only got access to a secret circlejerk subreddit. Reddit Gold is more like donations with the presentation that you are paying for something extra. They're incredibly loyal community falls more under "you better have a ton of people who love you," rather than a strictly freemium model. Linkedin is a better example of the freemium model because they have their base site and give a full new set of feature set to those who choose to pay. It also makes a large chunk of money off of company's posting job listings (FYI- it's $300 for a company to post one job.) Linkedin established itself as a necessary tool for networking which is why they can do this. Also, the "value" they provide is more substantial because it is directly linked to your job and your connections. I would not say that Facebook or Twitter is providing me any real value beyond entertainment and socializing. I guess a good way to look at it is "Why would I pay for a site?" Linkedin promises better networking, better career, etc. I can easily justify a monthly fee if a better career is promised. Facebook could promise what? No ads? Better socializing? Same with Twitter. What value would they have to provide me to justify by paying $x/month? Further, if they had started a freemium model from the beginning, what features wouldn't the base users have? No searching outside your direct network? Only seeing the first 50 of your friends photos? How could this have changed what Facebook has become? Right - but - if revenue covers your expenses, there's no room for the crazy growth websites need. People can run on passion of an insanely long time. But eventually that passion can't keep up with the reality that money is needed to survive. Once you have a successful website with tons of people on it, no one can afford to keep the servers running without external help. And once you can pay for the servers running, you have to keep innovating and developing and upgrading and updating to keep those people on your site. Without innovation your users will move onto the next thing. You also need real money - real profits to keep the highly talented engineers when your competitor offers them a better deal. You will want to hire a new team of people to develop another mobile app. Sure, you could get a fantastic team of people and pay them and hope you keep up in the ever-changing online world. But it's much less likely that you are going to be relevant in a few years if you stay stagnant. There are others chasing billions, working 80 hours a week, and innovating beyond belief. That's what you have to compete with. Those people who don't have a super successful site with hundreds of thousands of dollars in server costs yet. Those people who are fueled by insane passion and the promise of money down the line. Wikipedia survives because it is providing real value and has established itself as a global provider of every bit of information out there. That is an insane goal and probably why no competitor has appeared. But their layout, their mobile apps, there moderation tactics, their editing platform have all remained the same. Just like it would be interesting to think about what Facebook would look like if it ran off donations, Wikipedia would be infinitely more interesting to look at if it had gone for profits.Doesn't the freemium model completely contradict this assertion? Reddit Gold gives additional features to users who pay for it, and those without Reddit Gold don't seem to be complaining.
Are you sure you're not mixing up revenue and profits? I'm not an expert in accounting, but I'm pretty sure a company can still operate at full capacity if it receives enough money to pay its employees' salaries and other expenses
Excuse me, I have reddit gold and I can tell UPS at what time they are allowed to come to my door with a package. Considering UPS probably has the least customer-friendly model of any company I've ever encountered, this is priceless, I mean I seriously could not put a price on that ability. Fuck them, I think I'll go order six packages and have them delivered at noon, 12:30, 1, 1:30, 2 and fucking 1 am.Yes and no. Reddit is an interesting example because the features you get with Reddit Gold aren't that special.
I don't have reddit gold and I can do this too. Is this not a standard feature for UPS? If not, then one more thing to thank my company for.
My guess is that insom means that there are certain fixed costs to having a social media site. These fixed costs need to be realized before you can see any profit. These fixed costs should include labor. That said, a good and sustainable business plan wouldn't just break even, but they'd turn a profit beyond fixed costs because... well, bad times happen and reserves are needed for such things. But, any person or organization only needs so much to sustain themselves. As they say, "pigs get fat and hogs get slaughtered." I will say that I no longer visit sites I love, and take them for granted. I realize that most places I go online that are worthwhile have a team of people behind it, laboring intensely and often with little to no compensation. The best things all start off like this, with passion and will as your motivating factors. The concepts that are born with the sole intent to profit don't last long in the social media space imo. -It's easy to spot them, it's transparent and they tend to make me feel like a product while I'm on them. Nothing good comes from profit as a sole motivator. If you want to create something, do it because of the challenge or because you really want it to exist. (exiting soap box)