The Alms Race: The escalating development of product features providing direct financial plumbing (and community) tools to users occurring across the legacy Web2 ecosystem.

Prelude to the Next Web

Alms Race / Arms Race – Get it? Good.

I’ve been using the term to describe the financial expansion of Web2 social platforms. The development of tools that enable users to earn an income directly from other users. Whilst trying to keep as much of the value generated by said users ‘on platform’.

I think it’s a great term to describe the ever growing list of apps deploying integrated payment features and financial plumbing.

Automattic’s Tumblr recently launched monetisation features. Apple has launched a paid-for podcast subscription service, so has Spotify. Instagram has a subscription service coming. Twitter launched its paid subscription / premium service, you can make money on Pinterest, and of course get paid on Substack and Youtube.

Last year I made a episode of Permanently Moved called New App in The Alms Race. At the time I was talking about Substack’s reader app:

But what exactly are the platforms trying to ‘win’, and how did we get here?

Heres a brief (9000 words lol) history of the Web2 as I see it, and how ‘The Alms Race‘ came to be.

---

A Brief History of Web2

2004

The Web2 or ‘Social web‘ era would only really begin proper in 2004 however – nearly 20 years ago – with ‘The Web 2.0 Conference‘.

The Web 2.0 Summit (originally known as the Web 2.0 Conference) was an annual event, held in San Francisco, California from 2004 to 2011, that featured discussions about the World Wide Web. The event was started by Tim O’Reilly, who is also widely credited with popularizing the term “Web 2.0“. It was organized by O’Reilly’s company, O’Reilly Media, with O’Reilly and journalist/entrepreneur John Battelle serving as co-moderators. The Web 2.0 Summit was an invitation-only event and featured many of the most prominent entrepreneurs and thinkers of the web community

Speakers included: Jeff Bezos, Mark Cuban, John Doerr, Mary Meeker, Craig Newmark, Marc Andreessen, Cory Doctorow, Bill Gross, Lawrence Lessig, Halsey Minor, Louis Monier and Jerry Yang.

Paul Graham has a Nov 2005 post about Web2’s origins over on his blog it makes interesting reading – especially given the current criticisms around the vagueness of the term ‘Web3’.

I don’t think there was any deliberate plan to suggest there was a new version of the web. They just wanted to make the point that the web mattered again. It was a kind of semantic deficit spending: they knew new things were coming, and the “2.0” referred to whatever those might turn out to be.

And they were right. New things were coming. But the new version number led to some awkwardness in the short term. In the process of developing the pitch for the first conference, someone must have decided they’d better take a stab at explaining what that “2.0” referred to. Whatever it meant, “the web as a platform” was at least not too constricting.

The story about “Web 2.0” meaning the web as a platform didn’t live much past the first conference. By the second conference, what “Web 2.0” seemed to mean was something about democracy. At least, it did when people wrote about it online. The conference itself didn’t seem very grassroots. It cost $2800, so the only people who could afford to go were VCs and people from big companies.

As ideas and definitions coalesced and cohered, Web2 became a catch all term emphasising the following techno-social user behaviours: user-generated content, ease of use, participatory culture and interoperability for end users.

Also: Scale first, figure out the business model later.

Early Web2 platforms benefited from (and adopted) many of the cutting edge innovations in web technology of the time – the primary one being Ajax” or asynchronous JavaScript and XML. The other was Adobe Flash – which is best left unremembered lest we summon its ghost.

Anyways, server side innovation like Ajax also went hand in hand with Web Browser development – for example Firefox saw its beta release in 2004 and full Ajax support arrived in V1.0.

With Ajax, web applications can send and retrieve data from a server asynchronously (in the background) without interfering with the display and behaviour of the existing page. By decoupling the data interchange layer from the presentation layer, Ajax allows web pages and, by extension, web applications, to change content dynamically without the need to reload the entire page.[3] In practice, modern implementations commonly utilize JSON instead of XML.

Ajax is not a technology, but rather a programming concept.

During the rise of Facebook and fall of MySpace (Murdoch acquisition aside) one of the frequent reasons given for MySpaces’ demise at the time was that it was slow to adopt Ajax powered technologies.

2006

Google buys Youtube.

For Google, the deal has been an immediate success and a big hit with investors. While $1.6 billion may seem like a lot to spend, it really isn’t–not when the deal is all stock. Shares of Google gained $8.50 on news of the deal today, driving the company’s market capitalization up by more than $2 billion. So at least for the day, Google made more than $400 million on this deal.

If you go back and read these articles from the mid to late 00’s about early Youtube, almost all of them are focused on the issue of copyright and piracy.

Rather than being about people uploading original material – and having a creative practice on the platform.

a vast majority of the videos are posted by anonymous users who may or may not own the copyrights to the content they upload. While YouTube has halted much of the illegal video sharing on the site, it remains wary of placing advertisements against content without explicit permission from the owners. As a result, only about 3 percent of the videos on the site are supported by advertising.

2007

Youtube starts paying creators.

The quotes on Om Malik’s blog about the stigma of user generated content and running advertising against (to me) make’s 16 years ago feel a very long way away culturally speaking.

YouTube is going to start helping some of its indie video content creators make money, starting tomorrow. The company will launch a program that puts the creators of some of the more popular YouTube channels — including Lonelygirl15, LisaNova, HappySlip, renetto, Smosh, and valsartdiary — on the same playing field as large media partners like CBS.

“A select group of content creators will get promotion on the YouTube platform, and we will help them monetize their content,” said Jamie Byrne, head of product marketing, in an interview on Thursday. “This will help erase the the stigma around the user-created content, and, to be honest, these guys are media entities in their own right.”

Youtube, with the decision to pay its creators back in 2007 reshaped what Web2 would go on to become. You could make money now.

2008

Kevin Kelly published 1,000 True Fans in 2008:

find 1,000 True Fans. While some artists have discovered this path without calling it that, I think it is worth trying to formalize. The gist of 1,000 True Fans can be stated simply:

A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.

The 1,000 true fans (1KTF) thesis remains the founding principle or terrain over which the Alms Race is being fought over today.

Kevin Kelly’s ‘Key Challenge‘ however is still the key problem:

The key challenge is that you have to maintain direct contact with your 1,000 True Fans. They are giving you their support directly. Maybe they come to your house concerts, or they are buying your DVDs from your website, or they order your prints from Pictopia. As much as possible you retain the full amount of their support. You also benefit from the direct feedback and love.

The technologies of connection and small-time manufacturing make this circle possible. Blogs and RSS feeds trickle out news, and upcoming appearances or new works. Web sites host galleries of your past work, archives of biographical information, and catalogs of paraphernalia. Diskmakers, Blurb, rapid prototyping shops, Myspace, Facebook, and the entire digital domain all conspire to make duplication and dissemination in small quantities fast, cheap and easy. You don’t need a million fans to justify producing something new. A mere one thousand is sufficient.

The difference now, is that the social stacks have been incentivised to restrict direct contact between users. The reach apocalypse on Facebook, shaddowbans on Instagram, the algorithmic feed on Twitter. All these are mechanisms to reduce the amount of contact individuals and organisations have between users. The Alms Race is about re-engineering platforms of monetised attention and engagement to provide direct contact with -true-fans once again.

In addition to Kelly’s essay, we also got many books that I think of as defining texts in Web2 utopian (Webtwopian?) canon ‘The Wisdom of Crowds‘, Here Comes Everybody, Wikinomics etc.

Lastly, even in the initial essay Kelly recognised that groups, or collectives of people might have a little bit of a hard time under Web2 and 1KTF:

A few caveats. This formula – one thousand direct True Fans —  is crafted for one person, the solo artist. What happens in a duet, or quartet, or movie crew? Obviously, you’ll need more fans. But the additional fans you’ll need are in direct geometric proportion to the increase of your creative group. In other words, if you increase your group size by 33%, you need add only 33% more fans. This linear growth is in contrast to the exponential growth by which many things in the digital domain inflate.

Some of affordances of Web3 technologies which I’ll come to later are about sources of value, the subsequent organisation of it.

One of the most exciting developments in the space currently is the open, clear, and public contracts around the distribution of revenue to groups of people – AKA Splits. From Holly+’s DAO model, to Songcamp’s “Headless Band” concept – using 0xSplits smart contracts etc.

There is also of course the current vibe shift in to collective endeavours in the form of Metalabels. A project co-founded by Yancey Strickler.

The Creator Economy is creativity in single-player mode. Every creator for themselves.

A metalabel is creativity in multiplayer mode. A model for collaboration, collective world-building, and mutual support.

We dream of a world where millions of metalabels and cultural collectives are supporting their members and one another, and where cooperation and collaboration rather than zero sum competition are the norm. As individuals our powers are limited. In groups we become exponentially stronger.

2009

Speaking of Yancy. One year after 1KTF, five years after the Web2 era began, Kickstarter launched.

Kickstarter and crowd funding seems very quotidian in 2022. But back in 2009 Kickstarter really was game changing. The first company to truly prove that facilitating participatory culture and ease of use (in the case of Kickstarter financial plumbing) was possible. Before Kickstarter ‘who got to make money on the Internet was Amazon, e-commerce, and advertisers. It wasn’t for the little people.

It also worth noting that Stripe launched in 2009 too. Possibly the most important tech company in The Alms Race.

“Our mission is to increase the GDP of the internet”

Stripe aims to reduce the complexities of online payment processing with an easy-to-use interface for all users. A common hurdle faced by many startups and existing small businesses is the lack of coding skills and e-commerce understanding.

Stripe’s focus remains on removing these hurdles to enable businesses of all sizes to adapt to e-commerce.

Stripe now provides financial plumbing, to basically the entire non-corporate world, I sometimes find it difficult to explain to every day folks just how big a deal Stripe is. It sits right at the bottom of the stack -between the Virtual of the Internet and the Virtual world of their bank – for millions of people.

In a recent conversation, someone was shocked when I told them that the former Governor of the Bank of England, Mark Carney joined Stripe’s board back in February 2021 AND Stripe had a 95 Billion Dollar valuation (now only $50b but this is inline with FANG’s drop across the board this) and is still held privately.

Returning to Kickstarter, it’s worth taking a tour of some of the things that were written about Kickstarter back in 2009 – before the DoubleFine launch, before the Pebble watch etc.

Kickstarter helps artists, musicians, filmmakers, designers, and other creators find the resources and support they need to make their ideas a reality. To date, tens of thousands of creative projects — big and small — have come to life with the support of the Kickstarter community.

It’s really interesting, that in both the snippets, above and below, Kickstartar’s model had to be explained. Over and over again.

Unlike similar sites that simply solicit donations, patrons on Kickstarter get an insider’s access to the projects they finance, and in most cases, some tangible memento of their contribution. The artists and inventors, meanwhile, are able to gauge in real time the commercial appeal of their ideas before they invest a lot of effort — and cash.

“It’s not an investment, lending or a charity,” said Perry Chen, a co-founder of Kickstarter and a friend of Mr. Scioneaux. “It’s something else in the middle: a sustainable marketplace where people exchange goods for services or some other benefit and receive some value.”

I’ve been trying to find 2009/10 think pieces on why Kicksterter would fail. But Google is so fucking crap these days that its a difficult subject to surface. :C

Patrick Rooney, director of research at the Center on Philanthropy at Indiana University, said that some online donors, particularly younger ones with less money to contribute, could find Kickstarter’s model more appealing than donating to traditional nonprofit institutions. “It’s very personal in some ways, as opposed to giving a gift to, say, Indiana University,” he said.

Indeed, Emily Grenader, a 24-year-old artist in Houston, directly involved her patrons in her project: mailing postcards every day for an entire year. “I needed the funding but I also needed addresses — people — to make it work,” she said.

Ms. Grenader asked for $5 contributions and quickly raised double her original goal of $365. But money is still rolling in from people who want one of her cards. “It works because people want to support the artists, but they also want the things being offered,” she said.

Moving on, this video was produced for Kickstarters 5th birthday and is delightful.

---

2010

GoFundMe was launched in 2010. Emerging from a previous 2008 iteration called “CreateAFund“.

At the time, Indiegogo and Kickstarter were already crowdfunding projects for artists and entrepreneurs, but Ballester and Damphousse thought they could push the concept much further. They’d help individuals and small groups raise money for personal passions and needs, such as honeymoon trips and graduation gifts—crowdfunding “for life’s important moments,” as the two called it.

Almost immediately, however, it became apparent that “for life’s desperate moments” would have been an equally appropriate slogan. Although GoFundMe’s 18 preset donation categories today include education, animals, travel, and community, the most popular has always been medical. It currently accounts for one in three campaigns, according to company estimates.

Between 2010 and 2020 over $9 billion was raised on the GoFundMe platform, with contributions from over 120 million donors.

GoFundMe (to my mind) holds an interesting position in the web2 ere. Whilst clearly a financial plumbing website – the site made fundraising accessible to anyone and removed traditional barriers associated with raising funds.

It might not be central to the ‘creator economy’ and the Alms Race in the way that platforms focusing on artistic or content creation are, but GoFundMe still embodies Web 2.0: fostering community, enabling user-generated content, and democratising access to resources (in this case, funding).

2013

Let’s take a moment to further reflect on the ‘Creator Economy’. It’s only 10 years old.

Patreon launched in 2013. 4 years after launch of Kickstarter, and 9 years after the Web2 era began. Meaning that for half of the total period that we name as Web2 today, the idea and amorphous category that we call the ‘creator economy’ didn’t exist.

Below are the launch videos for both Patreon and the Green brother’s competing platform Subbable (swallowed up by Patreon in 2015).

Whats striking about both these videos is they both feel the need explain – at great length – the ‘concept‘ of user supported content.

Both of them use Kickstarter as their reference point:

Looking back on these videos with old eyes in late 2023; It’s remarkable just how quickly the concept of the ‘creator economy’ has been normalised. Earning money on the Internet as an individual is just a thing you can do now. Also interesting is that “Kickstarter for people, but monthly” was used as the reference point in both the above videos.

Kickstarter is still a major player in the ‘creator economy’ providing funding infrastructure for teams rather individuals. But as I will conclude further down the post financial mechanisms for individuals and teams will eventually merge in the near future.

THE KRAKEN AWKENS

This post is about tracing the history of how creators and users make money on the Internet. But I can’t avoid briefly talking about the Big Blue Bird in the room.

Twitter, with the exception of two years of its history has never made money.

The profit posted during 2018 + 2019 can (to my mind) only be explained by the presence of Trump on the platform. Even during the depths of the pandemic when there wasn’t anything else to do but burn out ones amygdala doomscrolling it managed to loose $1.1billion dollars.

Anyways, during the mid 2010’s Web2 scaled (Facebook spent the first 1/3 of the decade barely breaking even) the social stacks began to evolve into kraken. The monsters that we know today. Exploitative ‘social’ media platforms funded by advertising as the model for online interaction.

They ditched interoperability in favour of value capture; closed previously open API‘s, ditched participatory culture for clickbait and outrage, and user generated content became nothing but oil for the gears of the attention machine.

As social media enshitti-fied, its became an industry fed by attention. TikTok’s explosive growth during the 2020 lockdowns probably represents the high water mark and logical endpoint for Web2.

Tiktok and the introduction of short video formats everywhere have become a festering wound on the cultural psyche. Taking the 15 second audition pioneered by the X Factor to the peak of cultural importance. Content farms are out of control. Advertising, pop ups, requests for cookies and permissions are out of control too. The web has become an unnavigable ocean of questionable bullshit.

As the 2010’s continued, everything got worse. The social Kraken laser focused itself on the monetisation of attention. This had a huge impact on ‘creators’ (see why no one clicks on links anymore), Web2 rather than being a place for sending and receiving content, became a place where 1% of users created 99% of the content.

The Wikimedia foundation and Automattic (and by extension WordPress) are, in my opinion, some of the last bastions of the old web still delivering the dreams of Web2.

The Alms Race Begins

After the launch of Patreon, other platforms began to introduce mechanisms to provide financial plumbing to communities and individual ‘creators’.

2016 is also the year that Twitter went algorithmic feed by default. Youtube adopted it’s current ‘Deep Neural Network for YouTube Recommendations‘ feed, Facebook became worried that is previous algorithmic changes to the feed (first introduced in 2009) had brought about a decline in “original sharing. – Users were spending so much time passively watching and reading that they weren’t interacting with each other as much.

During the mid 2010’s we also see the rise of Rogan and Podcast’s like Serial re-shape the podcasting landscape. The advertising landscape evolves, Spotify makes a move into podcast audio too.

I don’t think its an accident that the first signs of The Alms Race – stabilising audience attention though recurring monetisation and community gates – begins around the same time as the algorithmic feed becomes the default mode embedded in the fabric of the social slot machine platforms.

2017

Substack is the last big ‘innovation’ in my history of the Web2. I’ve written about Substack loads over the years, so I wont repeat my own opinions on it.

Launching in 2017, Substack brought a simple monetisation strategy to the strongest form of community building on the internet: E-mail.

The big innovation:

Instead of paying Mailchimp to send email to users, users paid you to send email to them.

It’s worth pointing out, the Substack’s whole deal was first pioneered by Ben Thompson of Stratechery.

Substack is actually going live with its first publication today — Sinocism, a China-focused newsletter written by MarketWatch co-founder Bill Bishop, who’s using the platform to launch his first paid version, which will cost $11 a month or $118 a year.

Bishop has 30,000 subscribers, and he told me he’s experimented in the past with asking readers for donations.

“It didn’t work as a business,” he said. “It got too messy and I got sick of begging for money.”

In Bishop’s words, Sinocism’s new business model is “shamelessly copied” from Ben Thompson of Stratechery, where members can read free posts on Thompson’s website but need to pay to get his daily email.  Similarly, Sinocism readers will need to pay for access to the daily newsletter, but Bishop will also be writing a free weekly email.

Substack and other platforms like Revue etc – that also launched around the same time – in many ways held up a mirror to the developments happening in big Web2 social stacks:

The shift toward newsletters is part of a broader change. For years, Mark Zuckerberg, Facebook’s chief executive, asked us to live in a more “open and connected” version of the world. And billions of us did, posting status updates, photos and videos on the social network and flocking to other services like Twitter, where I post regular messages about my mood, personified in photos of my dog.

Now, more of us are moving toward private modes of sharing: a Slack group instead of a tweet; an encrypted Signal message instead of a status update.

Slowly, from 2017 onward, a more private and direct publishing/community building economy was a preferable paradigm to online ‘creators’ than being out in the storm brewing on social media – ultimately leading to the raid on capitol hill.

2018 Onward – The Monetisation Gap

A decade on from Kevin Kelly’s 1KTF – by way of the algorithmic feed and platform attention capture – Web2 slides into Web2.5.

From 2018 onwards, Youtubers (for example) were amassing audiences on platform and making money via the the advertising/creator program. But they were also building significant communities offering value to their audience and earning money off platform on Patreon.

For the stacks who’s entire business logic is built around value capture, this is unacceptable.

To continue with cold war theme, let’s call this realisation ‘The Monetisation Gap’ – and it needed closing. Especially as online advertising is a ticking time bomb and everyone know it.

In Subprime Attention Crisis, Tim Hwang investigates the way big tech financializes attention. In the process, he shows us how digital advertising—the beating heart of the internet—is at risk of collapsing, and that its potential demise bears an uncanny resemblance to the housing crisis of 2008.
From the unreliability of advertising numbers and the unregulated automation of advertising bidding wars, to the simple fact that online ads mostly fail to work, Hwang demonstrates that while consumers’ attention has never been more prized, the true value of that attention itself—much like subprime mortgages—is wildly misrepresented. And if online advertising goes belly-up, the internet—and its free services—will suddenly be accessible only to those who can afford it.
Deeply researched, convincing, and alarming, Subprime Attention Crisis will change the way you look at the internet, and its precarious future.

The Alms Race begins to heat up across all the major platforms around this time. With the emerging success of creative people making money on Patreon etc, the social stacks realise that value was being created on their platforms but money was exchanged elsewhere.

Keeping people on platform is what the Alms Race is – at its core – all about. Closing The Monetisation Gap.

The development of tools that enable users to earn an income directly from other users. Whilst trying to keep as much of the value generated by said users ‘on platform’.

Youtube was first out the gate with a suite of tools called ‘channel memberships’. First announced at VidCon 2018.

With Channel Memberships, viewers pay a monthly recurring fee of $4.99 to get unique badges, new emoji, Members-only posts in the Community tab, and access to unique custom perks offered by creators, such as exclusive livestreams, extra videos, or shout-outs.

2018, was also the year that live streaming became a significant force. Twitch clocked about ~9 BILLION HOURS of aggregate user watch time that year.

Ninja became the first live streamer to hit 3 million subscribers on Twitch, at the same time also being the first streamer to hit 150,000 paid subs on the platform:

With 150,000 subscriptions, assuming he takes half of the earnings from his $5 subs that Twitch would offer him, he earns at least $350,000 per month—and that’s not including any donations he receives during each broadcast. If he earns an even larger cut of each subscription via his agreement with Twitch, he’d make even more than that.

propertag.cmd.push(function() { proper_display(‘dotesports_content_2’); });

To illustrate the significance of Twitch’s growth the platform logged ~23.4 BILLION HOURS in 2021. Although IMO it’s better to think about this figure and what people are doing on Twitch in general. Twitch is a chatroom company with a shared screen attached.

Since 2018 almost all the Web2 platforms have introduced subscriptions, tip jars, bought and/or integrated newsletter functionality and community tools.

Spotify launched paid/gated podcast Subscriptions in 2021:

Through Spotify’s podcast creation tool Anchor, podcasters will be able to mark select episodes as subscriber-only content, then publish them to Spotify and other platforms. The service was initially tested with a dozen independent creators, and is now expanding to creators who had previously registered for the waitlist.

As is typical of The Alms Race in general, Spotify is providing tools to podcast creators and then leaving it up to creators to use them, and educate audiences (Contrast this with the launch videos of Subbable and Patreon up above).

The company, however, says it’s leaving the explanation up to the podcast creators.

“It’s basically up to every creator to educate their listeners about how and where to subscribe to the podcast, and the actual subscription happens on an Anchor webpage — on the creator’s profile page on Anchor. But once you do that and you authenticate it and you come back to Spotify, it’ll be unlocked,” says Anchor co-founder Michael Mignano. He notes that the Spotify app will not actually open this webpage due to App Store rules.

Apple launched its paid podcast subscription financial plumbing in 2021

Starting today, listeners in more than 170 countries and regions1 can purchase subscriptions for individual shows and groups of shows through channels, making it easy to support their favourite creators, enjoy new content, and unlock additional benefits such as ad-free listening and early access, directly on Apple Podcasts.

As did Pinterest:

Pinterest today is increasing its investment in the creator community by introducing new tools that will allow creators to make money from their content. Now, creators will be able to tag products in their Idea Pins — a video-first feature the company first launched this spring — to make their content “shoppable.

New platforms also launched during this period too. Filling niches and providing features to individuals and groups tailored to specific needs. Patreon’s longtime one size fits all approach doesn’t work for everyone – hence their recent pivot . Sites like professional author platform Curiousfictions.com had some amazing features for writers but creators failed to win their audience away from Substack or Patreons gravity.

2020’s – Post Plague Era

The pandemic was an absolute disaster for the creative industries. For musicians and artists who made the majority of their income from touring and IRL events especially.

The #supportnet as Mat Dryhurst calls it – Web2.5 Alms Race features – became vital lifelines for ‘creators’ of all kinds. Replacing lost income and also for building/rebuilding communities that could no longer meet in person.

The terrain of the plague era Alms Race was illustrated by SignalFire’s 2020 ‘Creator Economy’ market report.

I’m specifically interested in the ‘Layer 3: Creators as businesses‘. It shows that alongside the growth of Web2.5 features, there are a constellation of technologies, some originally built for small businesses that creators can also utilise.

OnlyFans (2016)

Made conspicuous by its absence throughout SignalFire’s report however is OnlyFans. A huge omission.

Estimated toward the end of 2020 to be a billion dollar business, and in 2021 sought investment at a 1 billion dollar plus valuation.

Even before the pandemic they were growing rapidly. They paid £641k corporation tax in 2018, which at an effective tax rate of 15% implies 2018 revenues of around £4m, or $5.5m. Today in 2020, their top users alone make this much money through their site.

With a couple of assumptions, it’s easy to estimate their yearly revenue today. And oh god is it big.

In 2019, they had over 60,000 content creators and 7m registered users. Extrapolating from the Google growth trends, it’s safe to say they have at least 10m users today. I calculated the average revenue per creator per month (about $250) and the average subscription fee (about $8.7) from my scraped data. Applying the 20% commission and assuming only half the users and creators are active, we end up with a lower bound of $90m, and an upper bound of $104m.

That’s an annual growth rate of between 304% and 334%. Absolute nuts.

Right now, both Patreon and Kickstarter are considered heavy nodes in the #Supportnet/creator economy ecosystem. In 2020 OnlyFans’ by valuation was only *just* out matched by Patreon’s $1.2billion valuation. But as I will discuss below – 3 years later things are looking very different.

Fuck You, Pay Me

OnlyFans is also notable for its ‘fuck you pay me’ approach to ‘creator’ pricing pricing.

The OnlyFans pricing calculator provides an interesting insight in to how creators of all kinds should be valuing their content. It’s a very different pricing paradigm to Youtubers, Patreon or Substack who are all hustling themselves to mental ill health for £5.99 a month. (like me)

However, like all creators inside the 1KTF economy and despite much high prices, things aren’t all that rosey for ‘creators’ on the platform:

1. 33% of the total revenue of the platform comes from 1% of top content creators.
2. Most accounts make an average of $180 per month
3. At one point during last year, the OnlyFans platform received between 7000 and 8000 new content creators per day.
4. There are 50 million registered users.

As you’ve inferred, making an OnlyFans account is not enough to start making money, most creators won’t even make enough money to pay their bills.

With 50 million registered users, it is not enough to go into the site, post explicit content, and expect to get paid millions.

So we are are where we are in 2023. The final promise of 1KTF – making money on the Internet – is now ubiquitous.

But things aren’t quite going to plan.

2023

I’m aware I’ve skipped over a whole bunch of other important Web2 stuff. Facebook marketplace, Etsy+Depop etc. But now we are up to date we should probably double back and talk about Patreon.

There’s a reason why I began this post with Jack Conte’s ‘Patreon is changing‘ video. In January 2023 patron had a $4billion valuation – today in December it’s only $1.5B.

Back in May, Patreon took additional outside investment at a 70% lower valuation than it had begun the year, after laying of 17% of its staff in September ’22.

The valuation that Cabrera was referencing was Patreon’s 409A. These valuations are calculated by outside auditors to determine the value of a private company’s common stock. (It differs slightly from the post-money valuations companies get when fundraising, which are typically based on the price of preferred stock).

Patreon was last publicly valued at $4 billion in April 2021 amid a $155 million Series F led by Tiger Global Management. A 70% drop would mean that it is valued at less than $1.5 billion today.

Only Fans meanwhile has grown to $18+ billion, and Business Insider is reporting that OnlyFans now has 3 million content creators signed up to its subscription-based platform.

Adult content subscription platform OnlyFans paid its owner $500m (£433m) in 18 months, accounts show.

Leonid Radvinsky was paid $284m (£246m) in dividends in 2021 and another $233m (£201m) since November.

Meanwhile, OnlyFans’ two million content creators made nearly $4bn (£3.47bn) in 2021, the company has revealed.

The platform, which is known for hosting adult content, saw a spike in users during the pandemic.

It reported pre-tax profits of $433m last year, up from $61m in 2020.

Given that Only Fans takes a whopping 20% cut from creators, there is a lot of revenue being transacted inside the app.

Caught In The Crossfire

To reiterate: The Alms Race is about value capture.

The logic and goal of social platforms in the 2020’s will be to not only capture the attention of users, also the value being created between creators and their audience.

Creators are getting caught in the crossfire.

Andreessen Horowitz recently estimated that 17 million Americans earned nearly $7 billion in income from their independent creations in 2017. In less that 5 years that figure has almost doubled to $13.8 billion.

Much of this economic activity is taking place outside of major platforms. The goal of platforms engaged in the Alms Race is to interpose themselves between the creator and audience. The stacks want a cut of the economic activity between artist and audience.

I have a number of open questions about the way things will evolve over the next 5 years or so.

1. Look at how long it took for all the various elements of the alms race to get underway. The reason the way things are they way they are in 2022 is a long complicated history. These things take a long time to arrive and evolve – as will the hopeful promises of web3.
2. How long until having a Patreon or other 3rd party financial collection platform is a violation of terms of service? 5 years?
3. The stacks that win The Alms Race race will play a part in shaping the norms, and social mores of online culture for the next decade at least.
4. Everyone knows that online advertising is absolutely fucked. A reckoning is coming for the whole online space and the fall out will be brutal. Platforms need their users to be transacting on their platforms to offset the coming fall in revenue.
5. As people retreat into the cosyweb and dark forests the bet I think the stacks are making is that at least economic activity will grow and flow though them as they are ‘trusted brands’.

Platform Gravity

Patreon, Kickstarter, Substack. And to a lesser extent; Youtube, Twitter, Tumblr, OpenCollective, Spotify, Shopify, WordPress, are the main platforms for individuals/creators wanting to manage communities and collect money.

One of the problems with ‘where we are in 2023‘ is that Patreon is a ‘generic’ platform used by Filmmakers, writers, podcasters, artists, musicians – you name it. Like off the rack high street clothing, Patreon needs to fit everyone and no one in particular. Where as Substack has a product focus on newsletters and hyperlexic creators and is building it’s social reading experience.

Patreon has to be all things to all people. Substack doesn’t. Unfortunately it Patreon doesn’t actually do anything that well. This, I think, is why Patreon is doing its reboot.

Like Substack, the only thing that Patreon has going for it that Patreon is where the Patrons are. It’s a very difficult ask to get people to sign up to Alms Race platforms if they are new, or don’t already already have their card details saved.

For example: A well known author I know tried to decamp his existing Patreon audience over to Curiousfictions during the pandemic. Why did they try and do that? Well, Curious fictions provided a vastly better suite of tools and mechanisms to monetise and interact with fans than Patreon. Some of these include: Full Feed subscriptions, access to individual novellas or stories. Gated access to individual short stories or chapters etc. A wonderful UX for Poets. Audio feeds and more.

Everything an author could/would need to experiment with different kinds of writing, content production, and monetisation outside of the ‘pay monthly’ Patreon model.

Unfortunately it didn’t go well – both with the trying to move the audience over, but also the platform eventually shuttered. So back to Patreon it was.

I still think there’s something special here, and part of me imagines reinventing the business someday (for example, as a nonprofit dedicated to promoting short stories and underrepresented authors), but I’ll need to step back and do some serious regrouping first (and hopefully, a little bit of writing).

As is the online ‘truism’ says – you have to go to where the users are. Because where the users are, the money is too.

Platforms have the users, and the creators, so they want a cut of your money.

Fees

When the ad supported web collapses, the only thing left will be rentierism and turnpike capitalism.

The fees that creators pay (and who they are paying them too) are an important but under discussed part of the the ‘creator economy’ and the Alms Race in general. Well, I say under discussed, fees are certainly not amongst creators.

But fans have little to no idea at all.

Web 2.5 is Rentier Capitalism All The Way Down

Here are (last time I checked) the fees payed by creators to major platforms for the privilege of using their financial plumbing:

Meanwhile the emerging metaverse platforms:

On top of all the above creators also need to pay their card processors fees to actually receive the money to their bank accounts.

There’s a reason in the old days the corner shop never used to let you use a card under £5. For small creators, fees are death by a thousand cuts. As the £5 a month model cannot hold for much longer, these numbers will inevitably race down to the bottom, more and more of it will get eaten by fixed fees. Some creators could be paying in excess of 7% (before tax!) on transaction fees in the near future.

The Next Web

In addition to platform capture and turnpike capitalism, there are other fronts in The Alms Race:

Epic vs Apple

The on going Epic vs Apple store drama is ultimately about the nature of platform capitalism.

Epic are leading the fight against fees both with the Appstore lawsuit but also with their won actions. 30% fees for publishers is the norm in the games industry, Steam, Apple, Google Play store all charge(d) the flat fee that traces its origins back to Pac-Man’s release on the Nintendo Famicom.

Epic are also fighting the battle on another front, having launched their own Games Store with just 12% fees in 2019. Mathew Ball’s Epic 6 part primer on Epic Games is essential reading in this regard.

Here’s the important part:

Sweeney believes that the most important segment of the gaming/entertainment ecosystem is the content creator. And, accordingly, the entire ecosystem benefits from making it easier for developers to make both a game and a profit, from driving a greater share of industry profits away from stores and infrastructure providers to these developers, and by breaking down the closed platforms of Microsoft, Sony, Valve, Windows, Steam, etc. 

Sweeney’s goal, in other words, isn’t “Embrace, Extend, and Extinguish”, or even to drive Epic’s share of gaming profits. Instead, it’s to drive the industry topline itself. 

“Epic’s benefit is that we operate games. We have one of the biggest in the world, and we get more Fortnite friends as a result of it. We can also really help [lift] up the industry as a group of companies that cooperate together and collaborate together to reach users as opposed to fighting each other. The worst term that’s ever been invented in the history of the internet is ’own the customer.’ The customer owns themselves! I’m sorry; read the Magna Carta. Our aim is just to help all game developers do that in the way that we’ve done it with Fortnite.” – Tim Sweeney

This approach is essentially unprecedented. Most companies benefit from industry-level growth, but they rarely trade off direct revenues to enable it. Especially when their business can capture, at most, 7-12% of the value. 

Driving top-line growth to Independent creators by pushing down fees across the ecosystem is the same demand that users caught in the alms race should also be making. Small businesses also could be making the same demands of Stripe, Visa and Master Card etc.

From a post-trial interview with Tim Sweeney, he reiterates why settlement talks with Google didn’t go anywhere:

We were rather far apart, let’s say, because what Epic wants ultimately is free competition and fair competition for everybody, and the removal of the payments tie and removal of the anticompetitive measures, which obviously leads to far better deals for consumers and developers.

Epic remains an imperfect messenger for App Store reform but they really do have this part right. It’s about the overall market for decades to come, not Epic or any other single company.

Pushing down fees makes more room and more money for everyone by driving the size of the market rather than capturing value.

---

Web 3

I am not actually going to talk about web3 in any detail. You can read my Dimensino series for that.

But we should acknowledge that it tracks as parallel history to web2. The Bitcoin Blockchain was launched in January 2009 and – wether you like it or not – revolutionised online financial plumbing. 15 years later, append only, public ledgers that process web native transactions are everywhere, and they will only continue expand and grow as the technology evovles.

Blockchains create and organise virtual value.

I will say however that the world of crypto/Web3 is also rife with fees. ETH is divisible to 18 decimal places yet 1-2% fees exist for core infrastructure!!! WTF? It’s madness.

When whole percentage point fees were earmarked for artists as royalties – a very good thing! The major NFT platforms decided to… just stop enforcing them? Fuck it all to hell.

The Alms Race won’t be solved by web3 in’s current form – though I am 100% behind the technology.

In a world of looming central bank digital currencies, de-banking and digital ID, Free and Open Source digital transaction technologies that are unstoppable are more important than ever.

AI

With the arrival of AI in addition to the new transactional arrangements between ‘creators’ and audiences on social platforms, we are also going to have to develop innovative and new structures around data rights, ownership and payment.

Holly Herndon and Mat Dyhurst and the Spawning.AI team have been banging this drum for many years already. And as I’ve said previously, I defer all my brainpower on ‘how exactly’ people will get paid for their data in future to them.

This is going to be at least 2 decade long battle and it will fundamentally re-shape the topology of the web and our cultural sphere as we know it.

Over the next 20 years the creation of, and ownership of these new cultural technologies has to be redrawn. The entire framework. Culture, copyright, creative remuneration . 

But this future speculative paradigm will emerge out of the conversions and positions we take today. 

So What Do?

The other week I found a machine sludge profile written about me by an LLM! I concluded my thoughts on that whole weird experience with the following:

If we want to avoid entanglements with this machine sludge, we need to rethink the way they use the Internet. It’s happening alongside the collapse of web2. We are retreating into the Dark Forests, into smaller more human-populated cosywebs. Search engines are over, and becoming increasingly useless.

The only place we may be able to trust the quality and usefulness of an article is by subscribing to and following real content from real people. And those of us who are still going to keep publishing in public, on the wider web, will need to keep those real people close.

I’ve also previously written this:

Things are going to look more like the Web 1 world – a fragmented patchwork of scenes, voices and platforms. Creators are already adapting to this new reality faster than audiences are. For example, podcasters like the blogosphere of old already do a lot of talking to each other as much as creating new and original content.

For the best part of a decade, people have been making content for an algorithm, not the audience. Worse, they haven’t been creating things for themselves. So if the feeds can no longer be relied upon to put content in front of new eyeballs then people are free to make the things that they want to make. Rather than making things that float well at the frothy surface of the social seas.

For some, this platform upheaval has resulted in a loss of income and uncertain futures. So if you see a creator whose work you enjoy saying follow me over here, or subscribe to my newsletter over there.

Do it.

I have no actual idea about ‘what to do’ about The Alms Race at all. The only thing I have control over is how I behave online. We need to find the edges of what behaviours and elements of the systems – what we reject, what consent to, and what we accept into our lives.

If you are on Instagram, you don’t need to look at short form video, no matter how hard the app tries to suck you in. I certainly wouldn’t ever want to use built in financial plumbing on that app. Supporting a ‘creator’ using Meta’s tools also ties the creator to the platform financially as well as re-enforcing your own relationship to it. “I’m putting money into this app, so the time I spend there must be worth something”.

If the next web looks more like Web1 but with better financial plumbing then at the very least the best parts of it are going to be DIY not AOL.

The mere existence of The Alms Race means, that being an independent creator online should mean being a creator thats independent of online platforms.

There’s a reason why I have never set up a patreon, or (as of right now) collected money via Substack etc. I self host this blog and it’s a massive pain, it costs more than you would expect to be as independent as possible. Hosting, domains, podcast hosting, platforms, backups, it all adds up.

If you want to support me and my work then the only platform you deal direct to stripe.com. It’s as close to the bottom of the stack and bare bones as I can get.

---

Phew if you made it to the deep end thanks so much. As I said 9000 words ago, this post has been sitting in my drafts for over a year. It feels good to finally get it out into the world.

I write stuff like this for clients and people all the time if you want me to do something for you – get in touch.