The Decade of Paid, and the Monetisation of Fame

Last week Twitter announced its plan to introduce paid subscriptions. There have been stories about Twitter starting to introduce payments for a while — Scott Galloway regularly mentions it on Pivot and in his columns — but these were the first announcements from the company.

In our trends deck this year we looked at ‘the decade of paid’ — the idea that this decade will see payment becoming more and more common. The internet has traditionally been free, or at least tended to ‘free’ models, with advertising being the main form of monetisation, but it feels like this is starting to change, in a world where Netflix has 200m paying subscribers and Disney+ nearly 100m, with neither offering a free layer.

There have always been stories of having to pay. I remember first showing the internet to colleagues back in the 1990s, and the first question was usually ‘how much do we have to pay for this?’. There were also urban myths floating around when Facebook started to take off that they would soon make us pay a few pounds a month. People couldn’t get their heads around something so useful being free.

But now things are changing, because online payment is so much cheaper, and it’s easier to lock different bits of content away.

What is interesting is how ‘paid’ has evolved, and become more nuanced and sophisticated. In the early days it was just paywalls — like the FT for example — but often allowing people a few free articles a month. Payment processing costs mean that it still hasn’t become viable to charge someone per article (say 20p, which is probably what each article in the FT costs me to read if I averaged it all out), but instead use the ‘all you can eat’ model which works as long as you actually use the service.

This works well for if you pay to benefit one organisation, like a publisher, but it can be inefficient if you are essentially paying for a marketplace, an aggregator. For example, If I pay £10 a month for Spotify, and in one month only stream one artist — say my friend’s band — they do not get my £10 (minus the commission). They get paid depending on what % of the total streams they account for, and this is likely to be much, much less. To this end, Spotify has now introduced what they call the ‘tip jar’ — on top of actually paying for your subscription you can pay extra directly to artists that you love.

The monetisation of fame

This is where the monetisation of fame and the ‘1,000 true fans’ theory comes in. Kevin Kelly first explained this idea nearly 15 years ago. He argued that:

“To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.
A true fan is defined as a fan that will buy anything you produce.”

If you can earn $100 a year from each of these fans then you have a very viable business.

Patreon (and OnlyFans and others) allows you to support creators that you admire with regular payments, and in return get access to exclusive content. Two examples — Backlisted, the excellent books podcast, lets its Patreon subscribers hear additional episodes where they discuss other parts of culture (TV, films, music), and hear new ‘core’ episodes a few days early. Vittles, the equally excellent food newsletter, does a weekly issue for paying subscribers only.

A16Z wrote a post last year one One Hundred True Fans which argued that payments via channels like Patreon were going up (the number of people paying over $100 a month has gone up over 20% since 2017) and you didn’t need 1,000 any more. Adam Davidson’s book The Passion Economy is essentially lots of case studies of this happening, and one of his maxims is A Few Passionate Customers is Better Than a Lot of Indifferent Ones, something I’m sure the people who rely on Patreon and OnlyFans would heartily endorse.

(I would too. I recently got an email from Pinboard, the social bookmarking site that I use as a memory bank for useful links, asking me if I would pay an annual fee, and I was very happy to, if it helps it to survive and add new features).

Another great example of this is Fiverr, the creative gig work platform. It started off as a site where you could get people to do things like design logos for $5, but is now much broader, with more flexible pricing, and they let their creators charge subscriptions so that people can commit to giving you work every month, for example updating a website or similar.

This is where Twitter’s new ideas come in. Twitter must know how important it has been in building up the fame of many of these creators, so why let other services benefit?

There is also a rise in ‘tipping’ on lots of platforms, for example Twitch, and this model is pretty common for influencers in Asia. I’m sure it’s something that would work well on Instagram and YouTube too.

This new income stream for creators means that some can now rely less on advertising. A few years ago a lot of newsletters would have needed to be ad-supported, which would have probably meant lots of poor quality ads — teeth whitening, tummy tucks — because they weren’t able to find advertisers who would have been appropriate to their audiences. Now they don’t need ads, as the fans are able to support it directly. One podcast I was listening to over the weekend had no ads, but if you were a Patreon subscriber you got access to an extra 20 minutes of chat.

What it will mean is that really good ad inventory is at more of a premium. The NYT has transitioned from being 70% ad funded 20 years ago to 70% subscriber funded now, and so it can afford to be much more bullish towards the brands that do want to advertise.

If this is the decade of paid, what comes next? I suspect that eventually we will see micropayments, where payment (possibly crypto) is built into browsers, and we don’t need to commit £5 a month or similar to a title or creator you don’t want to read regularly, but pay to read specific articles, or access specific bits of content. This would be much better for the casual reader, but the ‘all you can eat’ monthly models will be able to co-exist.