I worry that this is one of those market sectors where the price customers are willing to pay to use a service is dwarfed by the price advertisers are willing to pay for access to the users --- and so the ad-supported version is (a) free, (b) more attractive to users, and (c) more lucrative.
In a network-effect dominated business, this doesn't seem like a recipe for success.
I'm not so sure. The network effect here is to have all apps sharing one messaging fabric. The value of access to that fabric should go up as the network grows, and the costs of moving a message should stay low. Things fall apart if one or two apps start to dominate the fabric, but if that's true the open fabric wasn't needed in the first place.
I'm not predicting success here, I'm not even sure what the exact product is beyond a general idea of a twitter-gone-the-API route.
I'm in favor of the project. We'll all learn from it and I admire his moxie in trying it. I'm getting out my credit now to give it a $ upvote.
I can see (a) and (c), but what part of this scenario leads to (b)? The fundamental assertion underlying the desire for a paid network is that ad-supported networks are inherently worse for users because the network is built with advertisers in mind instead of users in mind. A paid network may very well bring in less money than an ad-supported network, but as long as it brings in enough money to operate I don't see the problem.
One solution to the problem of "your users are the product" is allowing your users to buy their own ad space at a multiple of how much they are predicted to make you.
If a user makes you $1/mo in ads then you could charge that user a multiple based on the growth rate of that income.
So if they are pretty steadily using your app and clicking on ads just use a 1.5x multiplier which would be $18/yr.
If their usage is growing and they are clicking on more ads then use a larger multiple, like 10x and charge them $10/mo.
Once you consider these users who "buy their own ad space" as advertisers, in a way you'll start converging on making a better product for people that pay.
Of course, the issues with this system is that it doesn't scale. The more users that become paying users the less data you have to predict how much you would be making on ads per user. Eventually, you would have to start guessing at that price.
This downside could be averted if someone created an API that allowed companies like twitter or facebook to POST information about a user and the API would broker how much that user is worth either by algorithm or auction and the user would be given a chance to beat the top price.
True, and yet what if there's an opening for the other model? And what if the opening grows as the market matures? It's worth a fresh try, every few years.
Ad-supported mass-market audiovisual entertainment dominated for decades... but there's still a growing niche for audience-paid ad-unencumbered alternatives: Pandora, satellite radio, ITunes, NetFlix.
Wait, so the idea is that you're going to charge for Twitter, without the network that makes Twitter worth anything at all?
As far as I can tell from the video and FAQ, that's what it is. A twitter clone that costs $50 a year. If this is NOT what it is, you simply have to do a better job illustrating what this platform is supposed to deliver.
Your page copy and the first few minutes of your video that I could sit through just tell me you are nerd raging over advertising on the internet. I get that you want to do something differently, but WHAT THE HELL ARE YOU BUILDING?
What am I becoming a "member" of? What am I funding? App.net appears to be a way to get more installs of mobile apps. What the hell?
There is a FAQ entry that attempts to address the question "OK, great, but what exactly is this product you will be delivering?" Are you unsatisfied with our answer in the FAQ?
UPDATE
I appreciate and agree with the feedback that we could explained things earlier and more clearly. Updates to our page coming soon.
Nth'ing the "I don't know what this is" crowd. To the majority of the population, "Twitter before it became a media company" is still just today's Twitter. Most people don't care about ads, unfortunately, and only a relatively tiny group of developers care about the growing restrictions.
Take off the developer hat for a moment; how would App.net improve my life? I read a great piece of marketing advice recently: in one sentence, create a problem, then tell me how your product solves it.
I am appealing to developers because I think they are the intended audience. I only think that is the most important experimental test.
From my personal blog post:
"Although Paul Graham is specifically describing a hypothetical new search engine rather than a new realtime feed service/API in this inspiring blogpost, his assertions about the power of 10,000 committed users are highly relevant:
The way to win here is to build the search engine all the hackers use. A search engine whose users consisted of the top 10,000 hackers and no one else would be in a very powerful position despite its small size, just as Google was when it was that size.
Since anyone capable of starting this company is one of those 10,000 hackers, the route is straightforward: make the search engine you yourself want. Feel free to make it excessively hackerish. Anything that gets you those 10,000 users is ipso facto good."
I appreciate the need for vagueness in your answer to the question of "What exactly are you building?" I'm sure in many ways you and your team don't know exactly how it's going to grow and change, and I for one would rather have the team making this thing be flexible and reactive as opposed to building to a spec that was promised to customers.
I think you would be able to reach more people more powerfully if you spent more time talking about your vision for what Twitter could have been had they not gone the ad route. As a designer working in the web industry, I am just as excited as you are about the potential for this thing, but I think most people need it explained a bit further to really get on board.
Perhaps you could highlight some of the really cool stuff that was built with the Twitter API that they then squashed. Talk about the potential OUTCOMES of this system, not just the origins of it. Hell, maybe even take some proposals from excited designers/developers for what they would do with said API, then use those proposals as a demonstration of the system's potential.
Hey Dalton & crew – congrats on this launch. I think that technologically, it's mostly clear what you want to build, but the thing that might be confusing is just that it is only described as "a real-time feed and API." Although you mention it's "Twitter-like," there still feels like there's some ambiguity in what type of content this feed is used for, especially since it's a paid service with the name App.net. For example, I don't know if I'm signing up to have a new social service, or a service that I'll mostly utilize in conjunction with app development, etc.
It took me 15 minutes to understand what "feed" means, which then lead me to understand what "social service" means. I think you intro paragraph could be clarified by replacing the word "service" with "platform". I know this isn't strictly true, but it's clearer to distinguish between platforms, which are for developers and services, which are for users. Try this:
"We're building a real-time platform that allows developers to create social services where users come first, not advertisers.
Our team has spent the last 9 years building social services, developer platforms, mobile applications and more.
We believe that advertising-supported platforms are so consistently and inextricably at odds with the interests of users and developers that something must be done.
I think this is a marvellous idea, and I'm now an official backer. One thing that I'm worried about is that a "pay wall" sort of model might prevent casual users from signing up. Maybe a paid API / developer model might work better.
For instance, the vast majority of GitHub users don't pay a dime, since they only use open source projects (which are free to host). There are many people/companies that use the paid service (mine included), but we pay for the "added feature" of being able to keep the repo private.
I can't put my finger on it, but something feels unbalanced. So, are paid users simply paying for the ability to post private updates? Or are they paying for access to other users' private updates?
I agree, I watched the video and read the FAQ and I'm still not 100% sure what you're building.
Edit: I hadn't read your original post at http://daltoncaldwell.com/what-twitter-could-have-been. I just read it and now it makes sense. I have a feeling your video will reach a much wider audience, so others might feel lost as well.
The pricing feels off to me if this is to penetrate the mass market.
While it might seem 'right' to us, who understand the effort this requires and appreciate the value it provides, especially over an ad funded service, $50/year just doesn't seem like it would appeal to the general public.
I suspect that even many of the savvy folks here would not lay out $50/yr for Twitter or Facebook if either were to switch to a directly funded model, and they have the advantage that they already have big networks.
I have no scientific basis to this, but I feel like for this to be a success, 99 cents a month, or $10/year, would be a price point to shoot for. I have no idea if it's plausible to run something like this at that price.
[I know, I sell a $10 iPhone app, so I perhaps am not the best person to make this comment...]
The video should start @ 3:00 exactly. It's a great pitch and gets me interested, THEN I'll listen to why you're building it, not the other way around.
"I've been inspired to build exactly the service that I want manifested. And that service is called App.net and this video is announcing this project... what is actually is is a real time feed and API, and rather than being a free and add supported service with no clear business model, we are actually going to be paid, and the reason I am so optimistic with a paid opportunity is that it aligns the incentives... etc. etc"
dalton, i saw a dear friend support you over my twitter and I clicked but have NO IDEA what this does? Seriously, I am pretty internet savvy but all I read was "feed platform" and how you weren't going to sell my data-- but what data? What is it? you might want to update the landing page a bit :)
Why aren't you offering an incentive to early backers? I can't see any reason to donate now, or within the 30 days, rather than wait and see how things develop.
The best incentive we currently have is the username claiming process. If/when project succeeds unclaimed usernames will be available to backers in the order that people backed.
What other incentives would you suggest? Happy to take suggestions. Today is the "announcement" phase, we are going to be collaborating w/interested folks and fleshing things out considerably more over the next month.
(p.s. I have been awake for far too many hours, so I am not sure I can effectively keep replying to everyone at the moment)
Kickstarter's limited rewards serve this purpose: discounted first year subscriptions, tote bags, stickers - the usual. It's a common strategy because initial momentum is so crucial for crowdfunding efforts.
You want to attract developers. XYZ number of free API calls for your app is simplest and effective way to attract developers, if I understood your proposal.
Aside from the "what exactly is this?" reaction, I just can't seem to get over the fact that I'm being asked to pay someone to build a service I will then have to pay for. This just seems absurd to me.
Either build it and I'll pay to use it or I pay you to build it and I use it for free. Can't have it both ways.
My left-brain says it's doomed. My right-brain says it's brilliant, and alpha geeks will lead the way in a mass secession from today's feudally-managed parasitic platforms.
So entirely separate from any quibbling about the likelihood of success, I'm backing this project at the developer level ($100).
I find it amusing that people are rediscovering the age-old concept of running business that directly charges a customer for a product or service that nets a profit.
This post strikes me as a "gee whiz" rediscovery of that fact through the conflation of:
1. Web 2.0 companies that "won" were really media companies. To win you need lots of eye balls.
2. A person can charge more for a product than it costs and get profit, which can be reinvested back into the product.
3. Instead of waiting for "profit" in said point above (which is risk to you and your company), you can instead reallocate that risk on future customers (and gauge interest at the same time).
I believe that the people running Web2.0 companies publicly and privately refuse to admit they are running media companies. ie "Twitter CEO Dick Costolo: We’re Not a Media Company" (source: http://allthingsd.com/20120130/live-at-dive-twitters-dick-co... )
Your quote is unfairly taken out of context. Here is the full quote:
Costolo: We’re not a media company. We’re in the media business. We distribute traffic. We’re one of the largest drivers of traffic to all sorts of other media property.
Dick Costolo seems to understand that driving traffic - perhaps from ads - is where Twitter makes money
What's wrong with just saying "We are a media company" if you are a media company. The definition of a media company is fairly well understood, right? Why insist that you occupy some slightly semantically different space?
Context man! He was speaking at a media conference filled with traditional media co's, such as The New Yorker, Viacom, and ESPN. It was even run by WSJ. To that audience, his statement highlights the nuance of traffic referral vs. accumulating page views, which is why Twitter is potentially poised for greater monetization than a "traditional" media company.
It feels unfair to pull that quote out of context. The point you are making is very different than the point that Costolo was making when he said it.
Do you say you are a media company? Because - by your definition - you are! There are plenty of media companies that don't sell advertising (eg, book publishers).
Twitter isn't a media company because they say they aren't! They see their goal as microblogging/self expression/communication (or whatever it is), and selling ads is just a means to that end. Google is that same - they see themselves as a engineering company organizing all the worlds information, and selling ads is just how they pay for it.
Compare that to something like News Ltd or NYT. They seem themselves as a media companies, and so when they run into technology problems they don't adapt well.
Some music and visuals would go a long way towards selling the product. I think we've all been spoiled by Kickstarter, but it's 2012, and we've come to expect incredible experiences when we watch videos of people asking us for money: just having an HD camera doesn't do it anymore.
As it is, I watched the first minute, and I still had no idea what benefit this would provide me as a developer or a user (only that Dalton clearly doesn't like Facebook), so I went back to my own coding.
Hypothetically let's say you reach the $500K goal. That is enough for a small team to survive for 12-18 months. Ongoing, will I have to pay $50 per year to use this service at the member level?
The reason I am happy to pay Github $25/month is because I want access to all my old projects. What is your thesis around whether people really want access to their old "feed" data (is that a proper way to describe it)?
My belief is that this sort of service will enable new/interesting applications and real value that could have been unlocked if Twitter took a different direction: http://daltoncaldwell.com/what-twitter-could-have-been
A lot of my other opinions have already been brought up so I won't restate them, but I further don't understand why you didn't use KickStarter? I dont know enough about your funding system to trust it with my money or info. KS has built a reputation and I trust I won't be charged in case the project goes under (not to mention you miss out on any network effects).
"Projects, projects, projects. As in all categories, Kickstarter is for projects that can be completed, not things that require maintenance to exist. This means no e-commerce sites, web businesses, or social networking sites. (Yes, this means Kickstarter wouldn’t be allowed on Kickstarter. Funny, but true.)"
I suspect this rule is open to interpretation. They've allowed MMORPG projects of various sorts (Your World, Pathfinder Online). Those certainly would/will have ongoing maintenance to continue existing.
It's likely all in how it's framed. There's probably a way to get this on KS if that's what is truly desired.
Not sure if this is supposed to be a paid Twitter, or if it is a paid platform for developers who need a real time feed infrastructure. If it is the latter, who owns the data? If it is the paying developer, be assured that they will sometimes offset that cost with ads.
In a network-effect dominated business, this doesn't seem like a recipe for success.