Business models matter. They are a form of governance — choose a business model, and you choose the rules you live by and the explicit and implicit incentives that will affect decisions small and large in obvious and subtle ways.
Yesterday, I talked about how we might benefit by moving from the “disruptive” paradigm stemming from the “move fast and break things” mentality of Silicon Valley and into a “slow down and fix things” mode, specifically when it comes to citations in this instance. Part of the solution to the larger shift into fixing things will involve placing ourselves back at the center of the technology world, in a way that gives us control of what happens and the benefits we derive.
This may mean abandoning business models developed in pursuit of scale, rapid information churn, and addictiveness. Many of these business models are built on a lopsided equations that usually come out in favor of the producers, using techniques known to foster addiction, and leaving the consumers with little leverage — businesses that advertise, sponsor, or fund information and services in order to push an agenda, glean marketing intelligence, and extract data offering free services that make the users into the product being sold to the producers.
Business models don’t need to exploit. Some inherently put consumers at the power center. These business models are designed to work when an organization is meeting paying customers’ needs. They are harder to build, but more lucrative, and self-managing in important ways. Part of fixing the future is recapturing this core relationship, where the user is not the product, but the product is made for the user. There is already a group of Silicon Valley veterans aiming to do just that through an initiative called Time Well Spent, which states the problem with the “apparently free but at a high hidden price” model thusly:
What began as a race to monetize our attention is now eroding the pillars of our society: mental health, democracy, social relationships, and our children.
Imagine if Facebook were forced to contend with making most of its money from a few million people paying a small amount each month, whose cancellations would have an immediate impact on the platform’s revenues? Would Facebook (or society) be better or worse off? Would Facebook’s fear of losing paying customers make them put their customers’ interests at the center of their behavior in a way that would increase accountability and foster mutual respect?
Facebook is the example I chose because it is where the limitations and problems with a media company parading as a platform are on full display, and also where the phrase “move fast and break things” originated. The company has been under pressure for the past year to clean up its act in the face of “fake news” and Russian misinformation campaigns. So far, their corrective actions look like more of the same, and I would argue this is because their business model is more of the same — advertising, advertising, and more advertising.
Take for instance the company’s recent announcement that it will begin to allow users to rank news outlets by reliability. This is a good example of how their business model’s limitations manifest in the real world, and how what they term “transparency” and “democratization” actually have to mean the opposite:
“Broadly trusted” outlets that are affirmed by a significant cross-section of users may see a boost in readership, while less known organizations or start-ups receiving poor ratings could see their web traffic decline significantly on the social network.
The transparency fails in that it’s unclear how user voting will be processed by Facebook, how readership will be boosted, what “significant” means, and so forth. It’s vague and opaque. We also need to acknowledge that network effects are inherently undemocratic, unless you conflate democracy with mob action. Given this approach, it seems likely that once a media property is large enough to have a decent following, it is unlikely to be unseated by a quality startup with a germ of an audience. Popularity and the power of groupthink (and incumbency) become entrenched and entrenching. The following two tweets read through from here well:
Facebook is complicit in the rise of said misinformation if it won't accept the work of experts in the field to help guide its efforts. If its desire is to not just deliver but actually sort and clarify information, it is failing on the most basic level.
— Joshua Topolsky (@joshuatopolsky) January 21, 2018
In addition to how the information is vetted, there are liability and cost aspects in each approach which bear examination, of course. And these seem to be at the heart of Facebook’s approach, which is designed to help them preserve their platform status and the lower liabilities (and costs) this conveys, as Kalev Leetaru noted in Forbes:
. . . Facebook is acutely aware of the growing public scrutiny of the outsized power it holds over what we can see and talk about online. Any attempt by the company to rank news outlets by “trustworthiness” and “quality” would likely be met by a fierce backlash. As government regulators continue their reviews of the company’s actions, such news rankings could tip regulators to view it as an active moderator rather than a passive content host. Instead, by outsourcing these rankings to its user community, Facebook can distance itself from the rankings, arguing that the scores are the result of its users, not itself and that it remains a neutral hosting platform.
Someone I didn’t ever anticipate agreeing with — Rupert Murdoch — commented on these matters in a way I found compelling:
There has been much discussion about subscription models but I have yet to see a proposal that truly recognizes the investment in and the social value of professional journalism. We will closely follow the latest shift in Facebook’s strategy, and I have no doubt that Mark Zuckerberg is a sincere person, but there is still a serious lack of transparency that should concern publishers and those wary of political bias at these powerful platforms.
The time has come to consider a different route. If Facebook wants to recognize ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies. The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.
Asking Facebook to not only acknowledge its social responsibility but to respect more professional, consumer-driven information organizations seems only fair.
As an industry, we seem to be moving away from the business model that puts information consumers at the forefront — the subscription model. One reason is that the subscription model has become heavily concentrated via institutional site licenses, decreasing the number of buyers by 1-2 orders of magnitude, while placing these buyers at a step of remove from the actual consumers, making direct sales to end-users pretty much a thing of the past in academic journals and increasingly for academic books.
There are major benefits to the subscription model, as well, as captured in a recent interview with the founders of Jib Jab, brothers Gregg and Eric Spiridellis. They are curators extraordinaire, and rely on the subscription model for a variety of reasons for their purely digital business — it encourages quality, gives them leverage over distribution channels, and provides them with the latitude to experiment, as they stated in a recent interview on Kara Swisher’s Recode podcast:
Eric: The great thing about those subscription businesses is they’re hard to build, but once you build them, they’re these great subscription revenue streams.
Gregg: As someone who was in the “hits” business for many, many years, there’s nothing better than the subscription business. You can actually sleep at night, and not worry about how your next piece of content is going to do.
There are multiple other forces — many informed by false notions like online delivery is cheap, the public is our core audience, that quick money is the best money, that Silicon Valley has a business model that we can emulate — driving organizations in our industry to shrink from the subscription model. Yet, even as we do, the subscription model is thriving.
To see how subscriptions are doing in a broader sense, I asked Kathleen Greenler Sexton, CEO & Publisher of Subscription Insider. Her answers to an email interview late last week are eye-opening — subscriptions are thriving, drawing investor money, and proving to be more profitable and sustainable. Counter to some boardroom talk I’ve heard, subscriptions for information products are very popular among younger audiences.
Whether information providers are media platforms, journals, books, news outlets, data aggregators, you name it, having a business model that aligns the interests of the consumer and producer makes more sense than those that invite exploitation.
While we’ve been focused on OA, the Internet’s major players have been quietly shifting in this direction themselves. The ala carte iTunes model is now the subscription Spotify model. The per-piece shipping model is now the Amazon Prime subscription model. The mainframe and installed software model is now the SaaS subscription model.
Would you pay $10/month for a Twitter subscription that gave you a better Twitter (sort reverse-chronology, access to premium feeds, more upstream curation by human editors, better threads, and more robust alerting)? What new business agreements could stream from this — premium providers receiving licensing and royalties to sustain their customer-centric efforts, more humans hired in better jobs to ensure accurate and relevant information reaches people how and when it should?
Without a business model aligning interests of producer and consumers, we end up with things like this — Flockademic, a “free” publishing platform named in a way that suggests academics are sheep to be shorn. We also end up with organizations where advertising executives have outsized influence, while subscription marketing can be de-emphasized. How we think and how we structure our businesses are both important factors.
Maybe it’s time to be less sheepish about aligning ourselves with our customers. That’s one way we can start to fix what a decade or more of disruption has broken.