Category: Audience as Capital

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Audience as Capital Discovery and Curation Life Design Making Money Online

Unlived lives and wormholes

This four thousand-plus word article in the New Yorker – about considering the alternate lives we could have lived if we’d made different choices – is a good longread as this year comes to a close.

This bit interested me:

The nature of work deepens the problem. “Unlike the agricultural and industrial societies that preceded it,” Miller writes, our “professional society” is “made up of specialized careers, ladders of achievement.” You make your choice, forgoing others: year by year, you “clamber up into your future,” thinking back on the ladders unclimbed.

This is by and large true. I had held for a while that I’d have a career in computer architecture and operating systems, either designing chips or OSes that ran on them. Instead I’ve ended up working with early stage startups across a bunch of fields including in finance. And while I’ve stayed in tech, it’s no longer practical to switch to my earlier, specialised tech career.

At the same time, the growth of no-code tools that bring fixed costs down, the proliferation of distribution channels to build your own audience, and several alternate means of financing (one, two) means that know-how and technical skills as barriers to entry are falling every day.

Five years ago the quote from the article would mostly hold; your career would be a journey down an eternally narrowing funnel. But today there are an increasing number of wormholes out of that funnel. Curiosity and passion are now at least as valuable as tech kn0w-how and access to capital.

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Audience as Capital Discovery and Curation The Dark Forest of the Internet

Independent publishers as the new distributors of controversial content

Major streaming video services have declined to bid on a new documentary about the Saudi Arabian government’s alleged killing of a dissident. Netflix, in particular, was eager to bid on and list Icarus, the director’s previous documentary about the Russian government’s pervasive athlete doping programme but, according to the New York Times, did not even reply to the director about this documentary.

The same market forces that make streaming services great US stocks to own – Netflix, Amazon, Disney among them – also make them less inclined to pursue anything outside of a certain risk-free definition of entertainment, since a broader market inevitably brings broader constraints on what is acceptable.

I see an important role for independent publishers with a direct relationship with their audience in distributing new material like this documentary, especially those that collect payments directly from their readers/subscribers as opposed to via sponsors.

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Audience as Capital Data Custody Discovery and Curation Making Money Online The Dark Forest of the Internet Wellness when Always-On Writing

For content platforms, revenue and moderation are inextricably interlinked

The newsletter platform Substack, on its revenue model:

A lot of people suppose that we started Substack to be the next big thing in journalism. But what we’re actually trying to do is subvert the power of the attention economy.

When engagement is the holy metric, trustworthiness doesn’t matter. What matters more than anything else is whether or not the user is stirred. The content and behaviors that keep people coming back – the rage-clicks, the hate-reads, the pile-ons, the conspiracy theories – help sustain giant businesses. When we started Substack to build an alternative to this status quo, we realized that a tweak to an algorithm or a new regulation wouldn’t change things for the better. The only option was to change the entire business model.

Substack’s key metric is not engagement. Our key metric is writer revenue. We make money only when Substack writers make money, by taking a 10% cut of the revenue they make from subscriptions. With subscriptions, writers must seek and reward the ongoing trust of readers.

Substack does two things differently from typical social platforms: one, by encouraging paid publications, readers pay to receive their information fix, which naturally caps the number of newsletters a person receives and by extensions the attention they capture. Two, it has aligned its revenues with these paid publications. These two by themselves are a significant departure from the norm, for the better.

There is always the likelihood, perhaps the inevitability that deliberately divisive, disingenuous polemical publications will publish on Substack for free, making money off sponsorships instead of reader payments, and they may amass large followings too. And Substack too has declared that they will be light with censorship:

we commit to keeping Substack wide open as a platform, accepting of views from across the political spectrum. We will resist public pressure to suppress voices that loud objectors deem unacceptable.

This will be something that Substack will have to reckon with, and perhaps soon. Yes, apublication with a generous enough sponsor – whether public or not – and a large enough audience is better off simply hosting their own newsletter infrastructure, which is not complicated. But they may also simply continue on Substack. What is the company to do then?

The possible answers are for another time. In any case, Substack’s approach to revenue and moderation, its recognition that they are interlinked, and its willingness to publicly articulate it, is commendable.

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Audience as Capital Discovery and Curation Making Money Online Writing

Content may be free but publishers of content can nevertheless be powerful

In a powerful essay that explains the moats that people who publish can create around their work, the reasons behind audience loyalty. This applies to whether the work is writing, video, podcasts or other mediums. I’ve summarised my understanding of the seven points the writer makes:

  1. Scale works differently: Writing has larger fixed costs and relatively low marginal costs, unlike tech businesses of late, which are built around low to zero fixed costs. As a result, investment in quality pays off more than in quantity.
  2. Network effects apply both to content creators as well as to content platforms like social networks, but apply differently. A publisher’s followers build a shared understanding of a small part of the world. At its best, it builds its own subculture.
  3. Publishers with strong points of view that run counter to established narratives are hard for existing players to compete with. Resisting it will fail to retain those who are inherently swayed by it; co-opting it risks alienating incumbents’ very audience
  4. Following naturally from points two and three, once a group of people with a shared interest, opinion and understanding has formed around a person’s published work, it’s hard for them to replicate it elsewhere. In tech terminology, the switching costs are high
  5. The publisher builds a brand that’s clearly identified with what their message is, and that makes it easy for people who’re looking for authority and quality to find them, because the internet’s discovery mechanisms optimise for exactly this.
  6. The publisher’s talent is a scarce resource – as we’ve seen in point one, it’s not easy to build to begin with, and in points two and four, that once built it’s not easy to replicate. And across industries, scarce and desirable resources are valuable.
  7. A final moat is a publisher’s craft, described by the writer as their processes. It’s built up over time and can neither be replicated quickly nor substituted by cash.

There’s significant overlap between them, but then it’s a grab-bag of points, not a framework. Nevertheless, it’s great starting material to understanding your power as a publisher (or ‘content creator’) and creating your own positioning.

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Audience as Capital Discovery and Curation Personal Finance Products and Design Wellness when Always-On

Herd mentality

I read recently about the USA investing app Robinhood being charged with “gamifying” investing and not putting in place “proper controls to safeguard inexperienced investors.” I was curious about what gamification techniques the service actually uses. Here’s what I found:

“Robinhood’s Role in the ‘Gamification’ of Investing: QuickTake”, Bloomberg, Dec 2020

Investors are congratulated for their first trade with a confetti animation. They’re offered a (tiny) chance of snagging a share of a high-price glamour stock such as Apple Inc. if they get a friend to sign up. They can browse the 100 most-held stocks among fellow users for inspiration. An entertainment ecosystem has risen up alongside Robinhood; TikTok videos under #robinhoodstocks have millions of views.

“Robinhood’s Addictive App Made Trading a Pandemic Pastime”, Bloomberg, Oct 2020

Robinhood’s app emphasizes social interaction by using the possibility of getting a free share of stock in exchange for inviting friends to sign up. You have a tiny chance of snagging a high-price glamour stock such as Apple Inc., Robinhood says, if your friend signs up and links a bank account. If you find your well of investment ideas running dry—or perhaps don’t know where to start—you can browse the 100 most-held stocks among fellow Robinhood users for inspiration.]

Robinhood and the Gamification of the Stock Market, McGill Business Review, Jul 2020

Through a Candy Crush-esque UX design with additions like confetti showers to celebrate transactions, the app gamifies the stock market, sending millions of bored-in-the-house millennials into a trading frenzy through a seemingly playful environment with dangerously real consequences.

Robinhood Has Gamified Online Trading Into an Addiction, Scott Galloway, Jun 2020

Confetti falls to celebrate transactions.
Colorful Candy Crush interface.
Users can tap up to 1,000x per day to improve their position on the waitlist for Robinhood’s cash management feature (essentially a high-yield checking account on the app).

Designed to distract: Stock app Robinhood nudges users to take risks, NBC News, Sep 2019

When smartphone owners pull up Robinhood’s investment app, they’re greeted with a variety of dazzling touches: bursts of confetti to celebrate transactions, the price of bitcoin in neon pink and a list of popular stocks to trade.

A critique of Robinhood’s gamified interface, Georgetown Collegiate Investors, Aug 2020

For starters, the flashing green and red lights, as well as the confetti, often lead users to act on their emotions instead of keeping a calm and level head. The green lights and confetti serve as subtle but prevalent psychological rewards for users. Likewise, the red numbers on the screen invoke feelings of anxiety and fear that may drive users to make irrational choices.

It’s surprising how over the course of a whole year and more, all the articles criticising Robinhood about its gamified interface don’t go beyond the confetti and a detail-less reference to Candy Crush-like design.

Further, nearly every post I’ve read on this topic follows a familiar narrative: that Robinhood encourages poor investing decisions because it doesn’t charge commissions, that it turns investing into a game, that it is disingenuous about how it makes money (payment for order flow to high-speed trading firms), that a customer once took his life after misinterpreting a large negative balance, quotes from ‘industry experts’ about Robinhood being the vanguard of a disturbing trend towards casual DIY investing. It’s astonishing how similar these articles are.

Ironically, the only post with any more detail and actual screenshots is this one, which praises Robinhood interface:

Robinhood is gamified from the start. They reward users that have just signed up with one free share of a stock, chosen by chance. The app doesn’t simply present the free stock to the user from the beginning. The process is similar to something you’d see at a casino. Users are presented with three blank cards, and are prompted to choose one. When chosen, the card flips and the free stock is revealed, with confetti and all…
The black background and bright primary accent colors are reminiscent of a Pacman game. Red is used when a stock has moved down, and green when a stock is up, creating a sense that the user is winning or losing

Obviously, this isn’t about what I think of Robinhood the service. It’s that the onus of understanding an issue in depth seems to be on the reader. And it doesn’t seem to be practical – the only reason I read over a dozen articles on the specific topic of Robinhood’s gamification of stock investing was because that was what I was curious about. The average reader’s just going to read one of these and form an opinion, unaware that all the other coverage of this issue is identical and narrow.

Ultimately this means that we, as individuals, need to choose carefully what topics we are interested in, since, as we’ve seen, the quality of online coverage leaves the duty of diligence to us. And finally, curators will almost certainly become even more important, moving beyond their role as tastemakers and influencers to shapers of world-views.

[Addition 5 Jan 2021] The clearest description of Robinhood’s techniques to drive impulse-based purchases is from a Twitter thread. If you are at all curious about what Robinhood’s gamification means, read through this:

https://twitter.com/petershk/status/1344286419380916228?s=20

(Featured Image Photo Credit: Austin Distel/Unsplash)

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Audience as Capital Data Custody Privacy and Anonymity Products and Design

Monopolies that may not matter

I came across this blog post that cites Peter Thiel’s thesis of monopoly power in his book Zero to One as one of the root causes of the dominance of Big Tech:

Thiel made the case for monopoly as the ultimate goal of capitalism. Indeed, “monopoly is the condition of every successful business,” he asserted. With it, you’re free to set your own prices, think long-term, innovate, and pursue goals other than mere survival. Without it, you’re replaceable, and your profits will eventually converge on zero.

… it’s not hard to imagine how Thiel’s outlook [on monopoly] has helped to justify behavior by tech titans that routinely crosses the line from aggressive to anticompetitive, including Facebook’s policy of cutting off access to its platform from any company it deems a direct competitor. Like Gordon Gekko in Wall Street proclaiming that “greed … is good,” Thiel’s full-throated defense of monopoly gave tech leaders such as Zuckerberg philosophical cover to ruthlessly pursue their own self-interest while patting themselves on the back for it.

I think the writer misses an important point: the definition of a market that a business looks to monopolise. With sharp positioning, brands divide a market into a number of micro-markets that they look to dominate. See this good explanation of what great positioning looks like:

Harley-Davidson publicly shared their positioning statement:
The only motorcycle manufacturer
That makes big, loud motorcycles
For macho guys (and “macho wannabes”)
Mostly in the United States
Who want to join a gang of cowboys
In an era of decreasing personal freedom.

In tech, the barriers to entry in most spaces have trended downwards. Funding has, in general, been plentiful, including during a year as unusual as 2020. Every creator wants to be monopolist for their increasingly narrowly defined market.

Facebook, the target of an antitrust case as of this writing, understands this well. Facebook leadership understands that people tomorrow may look to something completely different to stay ‘open and connected’. It could be visual – hence their acquisition of Instagram. It could be text-oriented, group and chat based – see Whatsapp. Could be VR – Oculus. Could be audio or even video, hence their description of Tiktok as an existential thread and their building of stories into every product, including Whatsapp statuses. But it could also be something that looks like Slack or Discord. It could be something built on top of boring old email, unrecognisable from today’s traditional email clients. But more than anything it could be all of them. It could be – and is likely to be – multiple startups of each such type optimised for different narrow audiences.

Everyone may still have a Facebook account, they may still be tracked all over the web, and it wouldn’t matter because they’re no longer logging into Facebook that often to be served ads.

To come full circle on the issue of monopolies – one could imagine a future in which Facebook could technically be a monopoly: they could be the number one social network by far. Their MAUs could be in the billions. But their Big Tent positioning would also be irrelevant in a world where tens of thousands of brands have successfully created microniches such that not a single one of them holds a candle to Facebook’s numbers but taken together they have taken away all of the attention that Facebook used to capture.

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Audience as Capital Data Custody Decentralisation and Neutrality

Three takeaways from the youtube-dl episode

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This episode about the takedown and reinstatement of the video-downloading tool youtube-dl (Part 1, Part 2) makes three things clear.

One, centralised platforms like Github are single points of failure. This is especially unfortunate on the Internet, which is decentralised from the ground-up. Maintainers of projects like youtube-dl must invest in building a censorship-resistant presence online.

Two, despite decentralization, we need organizations like the EFF, the Mozilla Foundation, the Tor Project, the Wikipedia Foundation, the Internet Archive. To that end, we must support them monetarily and, if possible, by volunteering. We must also hold them to extremely high standards of ethics and neutrality and keep them from being beholden to, or even the appearance of being beholden to, a government or a particular tech company. If they make bad strategic decisions, we must criticise – constructively. They may not be big, but they are too important to fail.

Three, we must recognise that every one of us needs to be an activist for an open Internet. Our actions and inaction have consequences. If no one had expressed their opinion on this issue online – even merely through blog/Medium posts or tweets – it’d be harder for the EFF’s efforts to have the impact that they did. Think back to other instances where Internet companies have been pressured into reversing decisions due to public opinion: the tussle between Apple and the email app Hey being the most recent one. Hey’s founders have a great many followers they could rally, but it was those followers that made the difference. The greater your online audience your capital, the greater your responsibility to be a good citizen of the Internet.

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Audience as Capital Data Custody Decentralisation and Neutrality Discovery and Curation The Dark Forest of the Internet

The reinstatement of youtube-dl

Context: we had discussed last month how GitHub had taken down the code and binaries for the youtube-dl project, a tool that can be used to download videos from YouTube and a variety of other sites, and how and why it was a travesty.

In a post written by the company’s director of platform policy, the code-hosting platform said the following:

The youtube-dl takedown notice fell into a more unusual category: anticircumvention—an allegation that the code was designed to circumvent technical measures that control access or copying of copyrighted material, in violation of Section 1201 of the DMCA.

Section 1201 dates back to the late 1990s and did not anticipate the various implications it has for software use today. As a result, Section 1201 makes it illegal to use or distribute technology (including source code) that bypasses technical measures that control access or copying of copyrighted works, even if that technology can be used in a way that would not be copyright infringement. Circumvention was the core claim in the youtube-dl takedown.

Establishing that, the post then goes on to state that in their opinion, the youtube-dl project did not circumvent technical measures:

Although we did initially take the project down, we understand that just because code can be used to access copyrighted works doesn’t mean it can’t also be used to access works in non-infringing ways.

Then, after we received new information that showed the youtube-dl project does not in fact violate the DMCA‘s anticircumvention prohibitions, we concluded that the allegations did not establish a violation of the law.

This new information came through a letter sent by the Electronic Frontier Foundation’s attorney [PDF] to GitHub. This is the highlight of the whole story for how well it explains what youtube-dl does and does not do. Quoting from the letter, not necessarily in the order in which they appear in the letter:

when a user requests certain YouTube videos, YouTube’s servers send a small JavaScript program to the user’s browser, embedded in the YouTube player page. That program calculates a number referred to as “sig.” That number then forms part of the Uniform Resource Locator that the user’s browser sends back to YouTube to request the actual video stream. This mechanism is completely visible to the user simply by viewing the source code of the player page. The video stream is not encrypted, and no secret knowledge is required to access the video stream… Importantly, youtube-dl does not decrypt video streams that are encrypted with commercial DRM technologies, such as Widevine, that are used by subscription video sites, such as Netflix

We presume that this “signature” code is what RIAA refers to as a “rolling cipher,” although YouTube’s JavaScript code does not contain this phrase. Regardless of what this mechanism is called, youtube-dl does not “circumvent” it as that term is defined in Section 1201(a) of the Digital Millennium Copyright Act, because YouTube provides the means of accessing these video streams to anyone who requests them.

To borrow an analogy from literature, travelers come upon a door that has writing in a foreign language. When translated, the writing says “say ‘friend’ and enter.” The travelers say “friend” and the door opens. As with the writing on that door, YouTube presents instructions on accessing video streams to everyone who comes asking for it.

youtube-dl does not violate Section 1201 of the DMCA because it does not “circumvent” any technical protection measures on YouTube videos.

This is wonderfully explained, and the analogy is spot-on.

I do not expect Github’s lawyers to have understood this mechanism when they first received the takedown request from the RIAA, but one would expect them to have discussed this with someone technical at GitHub, who either knew or could have asked the project about this mechanism, and this technical person and the lawyers could have determined that it did not circumvent technical measures. My guess is that in an effort to project neutrality, they did not initially take a stance one way or another. Indeed, the blog post has a short section at the beginning titled “Why did Github process this takedown in the first place?” which doesn’t really address why they went all the way to removing the youtube-dl project if they understood the issue:

As a platform, we must comply with laws—even ones that we don’t think are fair for developers. As we’ve seen, this can lead to situations where GitHub is required to remove code—even if it has a multitude of non-infringing uses—if it is in fact designed to circumvent a TPM. But this is exceedingly rare. 

I think it’s the EFF’s advocacy, finally in the form of a legal document, that gave GitHub the confidence – or cover – it needed to do the right thing. That combined with the public outcry against this.

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Audience as Capital Discovery and Curation Making Money Online Writing

Writing for shorter attention spans

From an interview with Anand Samwal, the publisher of the excellent business newsletter CB Insights, which I have subscribed to for years now:

“As attention spans have shrunk, short, conversational, and highly visual research is more respectful of the reader’s time and that is the type of research we aim to provide,”

“I’d characterise our research as being of ‘higher nutritional value’, which means fewer words and more insights vs being full of ‘empty calories,’

This explains the fun and rather cheeky tone of its newsletter.  It also explains the focus on bite-sized commentary and shareable infographics,

Credit for these numbers [640,000 subscribers] go also to the carefully crafted, irreverent headlines.  “Bye-bye,” “no more startup drama pls,” and “this might anger you,” are a few examples of these headlines – the kinds that leave subscribers curious and wanting to click through.

(Featured image photo credit: CB Insights website)

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Audience as Capital Data Custody Privacy and Anonymity RG.org The Next Computer Wellness when Always-On

Generations, and their relationship with tomorrow’s big questions

The venture capitalist Andrew Chen wrote a Twitter thread about how some of the most influential new ideas sounded outrageous when first proposed. He describes Uber, for instance, as “an app that lets you into strangers’ cars” which is really exactly what it is.

This is what I found interesting though:

… these ideas often formed at the seam of the “natives” versus the “immigrants.” If you are Instagram-native, what you consider a great idea for a new retail space or ecomm brand is likely very different than someone who isn’t exposed to the same thousands of pics…

The upcoming generation are using tech in a different way. They are Fortnite-native. Minecraft-native. They are streaming-native. They use “insta” differently. Food delivery will be considered a human right. The expectations will be very different.

I often think about how different generations think about the Megatrends and Big Questions that we explore on this site.

Xennials like me were born in a mostly analog world, but grew up when PCs became common in people’s houses. Millennials always had a PC in their houses, connected to the Internet, and grew up with Nokias and Motorolas. Gen Z have not experienced a life before smartphones with 3G connections.

Each of us will consider questions like data custody, privacy and anoymity differently. They’ll have different views on the place of a ‘computer’ in their lives, and have different ideas on the effects of being always on.

I think that the answers to making the right choices about each of these issues is timeless, but it is the natives, to use Andrew Chen’s term in this context, who will get the word out most effectively. Building an audience will come naturally to them. And because they have navigated social networks in their most socially fraught years in school, are well aware of an audience’s value as capital.

Immigrants like me will use more traditional mediums, like this nearly two decade old blog, and traditional models, like the megatrends and big questions, to raise awareness.

(Featured image photo credit: Hansjörg Keller/Unsplash)